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New EV Tax credit: what happens if you sell after claiming $7,500 credit?

Hello,

 

Avid TT user for decades. Love the product! However I have a question on tax implications of the EV tax credit.

 

I am considering purchasing an electric car and taking the $7,500 credit. I cannot find any information about what happens if I sell the car after taking possession and claiming the credit. Do I have to repay the credit? Where would I report the sale in TT? 

 

Credits for New Clean Vehicles Purchased in 2023 or After | Internal Revenue Service (irs.gov)

 

I believe the form is 8936: 

About Form 8936, Qualified Plug-In Electric Drive Motor Vehicle Credit | Internal Revenue Service (i...

1 Best answer

Accepted Solutions

New EV Tax credit: what happens if you sell after claiming $7,500 credit?

However, you may have a taxable gain.  The credit reduces your cost basis.  For example, of the car cost $50,000 then your cost basis after the credit is $42,500.  If you sold it as a used car for $45,000, for example, you have a taxable capital gain of $2,500 (selling price more than cost basis).

 

The cost basis adjustment may also have an effect on depreciation if you use the car for business.  

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5 Replies

New EV Tax credit: what happens if you sell after claiming $7,500 credit?

There are no limitations on how long you must own the car before you can sell it and the credit does NOT need to be repaid.  

New EV Tax credit: what happens if you sell after claiming $7,500 credit?

However, you may have a taxable gain.  The credit reduces your cost basis.  For example, of the car cost $50,000 then your cost basis after the credit is $42,500.  If you sold it as a used car for $45,000, for example, you have a taxable capital gain of $2,500 (selling price more than cost basis).

 

The cost basis adjustment may also have an effect on depreciation if you use the car for business.  

New EV Tax credit: what happens if you sell after claiming $7,500 credit?

@Opus 17 

where does it say that in IRS Pubs?

 

New EV Tax credit: what happens if you sell after claiming $7,500 credit?

New EV Tax credit: what happens if you sell after claiming $7,500 credit?

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