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

Forum|Forum|6 years ago
December 17, 2019
4 replies
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I bought an EV in April 2019, and planning to sell it now (Dec 2019). I put about 18k miles during the time of ownership.

So I have a few questions:

1) Is there a time frame that I have to own the car in order to qualify for the tax credit?

2) Will I still be eligible to file for tax credit if I sold the car same year as purchased?

3) Do I need to submit any document to prove that I am the original owner, so that the "new owner" cannot file it?

Thanks.

Vanessa A

1) Yes, you would need to own the vehicle for 3 full years to not end up having to pay back the credit or part of the credit.

2) No, you would not be able to take the credit. The recapture amount for the first year of service is 100% so even if you did take the credit you would need to pay it back in full.

3) The new owner would have to prove their right to claim the credit. This is not something you need to deal with.

EV Credit Recapture

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dmertz

Employee

There is no recapture requirement for the credit for a qualified plug-in electric vehicle under § 30D. The recapture mentioned in CFR § 1.30-1 is for a credit taken on an electric vehicle under § 30, not § 30D. § 30 was repealed in 2014, so the credit that had been allowed under that section is no longer available.

To answer the original questions:

No, there is no minimum amount of time you have to own the qualified plug-in electric vehicle to qualify for the credit as long as you can establish that you purchased the car for your original use and not for resale.
Yes, you can still qualify for the credit even if you sell the car in the same year, provided you meet the general requirements, including the requirement that you are the original purchaser.
No, you would only need to submit documentation if the IRS challenges the credit on your tax return due to suspecting that you bought the car for resale and not for personal use (or for some other reason unrelated to you selling the car).

rrobster

What if I am the purchaser of the electric vehicle and it is initially registered in my name and then I gift the vehicle to my son and transfer the title to his name? Would I be able to claim the credit since no money was exchanged like you would have on a sale of the vehicle?

Morgan_M

These two answers say opposite things - what’s the current best information?

RaifH

There is currently no requirement on the plug-in electric drive motor vehicle credit for length of ownership. As long as you were the original owner and did not purchase it with the intent of reselling it, then you are eligible for the entire credit with no requirement that any needs to be repaid if you do end up reselling it in the same year.

As @dmertz said, the IRS can challenge your assertion if they suspect your original intent was for resale. From the IRC 30D, the only time the credit was can be recaptured is if one of these ceases to be true:

(A) the original use of which commences with the taxpayer,
(B) which is acquired for use or lease by the taxpayer and not for resale,
(C) which is made by a manufacturer,
(D) which is treated as a motor vehicle for purposes of title II of the Clean Air Act,
(E) which has a gross vehicle weight rating of less than 14,000 pounds, and
(F) which is propelled to a significant extent by an electric motor which draws electricity from a battery which— (i) has a capacity of not less than 4 kilowatt hours, and (ii) is capable of being recharged from an external source of electricity.

@Morgan_M

jpck_0424

Hello,
So what about in the case of a full-on battery electric vehicle (BEV) with tax deductions worth $7500? For example, I bought a Hyundai Kona Electric a couple of months ago, but now I regret it because it is too small for our family. Because I didn't purchase it with the intent to resale, would I be allowed to still claim that federal tax credit if I were to sell it a couple months later? Thanks.

evanryu1124

Hi I purchased a Tesla model Y in January, 2023 and I was planning to sell in April, 2023. And I purchase another Tesla model Y in 2023. Would I be still eligible for the IRS 7,500 federal credit for both vehicle? I purchased both vehicle for my personal use but I would sell the first one since the vehicle was making noise. I would appreciate for your expert advice.

BenMog

I purchased Mod Y too in February and looking to sell soon, @evanryu1124 Just wondering how best to sell or what platform you used and also how much lost I should be looking at. Thanks

evanryu1124

Hi, I sold it to Algo.com but didn't go forward as I wasn't sure about getting the tax rebate. They quoted me 48k which is about 6k less than the current msrp+destination fee. The car is in service and hope they can fix the noise issue.

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. 😞