Selling EV same year as purchased, still able to use the EV Tax Credit?

[NCperson]

There is no requirement to prove when filing. 

Yiu only have to prove if audited.  I’d show documentation of losing job, cash balance on bank account, payment history on car loan , credit cards, etc. showing the challenges of maintaining ownership while unemployed.  Id it were to occur, documenting the new job pays less than the old job, that would help ax well 

[utsavmat]

Hi, I have a situation where I live in NY city and my sister lives in California. I want to buy a Tesla for her. Can I buy one from NY and then transfer ownership of the vehicle to her? I am eligible for tax credits, she might not be (beats by a small margin). My plan is to purchase it in November 2023. Thanks.

[Mike9241]

one of the conditions for getting the credit is that you do not purchase it for resale. there is nothing mentioned about purchasing a vehicle and then making a gift of it. but then considering the cost you would have to file a gift tax return which Turbotax does not do. also consider the cost of shipping it cross country  or her coming to NY to drive it back.  then there is license and registration issues. 

[NCperson]

@zengray here are the IRS FAQs for new EVs.  There is nothing in these FAQs that preclude you from doing what you propose. 

https://www.irs.gov/newsroom/topic-a-frequently-asked-questions-about-the-eligibility-rules-for-the-...

@Mike9241 - can you please post the link that states that the EV must be for personal use and not for resale?  I do see that language for in the IRS FAQs for USED EVs, but not for New EVs. 

https://www.irs.gov/credits-deductions/used-clean-vehicle-credit#:~:text=Qualified%20Vehicles%20and%....

[Mike9241]

no problem from IRS website

https://www.irs.gov/credits-deductions/credits-for-new-clean-vehicles-purchased-in-2023-or-after 

Who Qualifies
You may qualify for a credit up to $7,500 under Internal Revenue Code Section 30D if you buy a new, qualified plug-in EV or fuel cell electric vehicle (FCV). The Inflation Reduction Act of 2022 changed the rules for this credit for vehicles purchased from 2023 to 2032.

The credit is available to individuals and their businesses.

To qualify, you must:

Buy it for your own use, not for resale

the applicable code section is 30D(d)(1)(B)

Am i missing something? 

[NCperson]

@Mike9241  I simply did not see that 'personal use' language on the FAQ page I was reviewing.  Thx for pointing out the other IRS web page where it clearly states the same "personal use" language as the EV Used vehicle page. 

[Mike9241]

@NCperson your welcome. I too sometimes miss things.   

[Schlsck]

I just bought my Model Y yesterday. The noise and cabin pressure fluctuations are unbearable. The car is effectively unusable. 

I’m following up with Tesla. But if I were to trade it in within a few days or weeks of purchase and get another EV, my reading of the situation is I would still qualify for the credit on my Model Y (and the new EV) because my intent was always personal use and not resale. 

I'm curious what others think of this. 

[Mike9241]

No test drive of the Y? but I think you would win any argument with the IRS because you are trading it in rather than selling to a third party.  Note that the basis of the Y is reduce by the EV credit and if you get a trade in number more than the adjusted basis you will have taxable income. 

[Schlack]

That makes sense. Thanks. 

I test drive the Model Y twice. My wife test drove it once. Never had this issue. 

The trade in value is about $8500 less than purchase price, so no gains to realize. The real problem with this approach is that I’m unsure I want to gamble on another Tesla. 

Most likely I’ll give them the opportunity to fix it a few times then lemon law it. :(

[Dartanian]

Regarding the USED EV Tax Credit: I understand that the buyer must have an intent at the time of purchase to NOT be buying the vehicle for resale, but what is the consequences of selling it soon thereafter, like say a month later? I have heard that you must keep it for at least 30 days to avoid issues with the IRS. Is there any requirement that the buyer must hold on to the vehicle for any specific time period to avoid any IRS recapture claims?