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For immediate resale value, is 220 or 310 version more effective?

For immediate resale value, is 220 or 310 version more effective?

I understand that getting the 310 version would give me higher demand since delivery will be ahead of the 220 miles version.

However I imagine there are lot of people out there who would be happy with the lower cost. In my state total cost for the 220 would look like:$39K + $1000 + reduced taxes = $40,000 - $7,500 tax credit = $32,500.

andy.connor.e | 6 November, 2017

More range is more attractive, therefore higher resale. But you pay 9000 for the upgraded batter. If you're looking for more % of your money back, thats a tough call to make. But more people would be willing to buy a used Tesla that has the longer range.

dsvick | 7 November, 2017

If you're planning on immediate resale you cannot claim the tax credit.

thedrisin | 7 November, 2017

@dsvick

@dsvick

There is so much misinformation about this. The IRS form 8936 only requires that the car be put into service for the tax year you are claiming the credit. There is no time requirement for how long you actually own the vehicle. You do not have to submit any other proof of ownership. You can register your car and sell it immediately. If you are an individual, not a business, you are not really considered acquiring for resale.

https://www.irs.gov/pub/irs-pdf/f8936.pdf

andy.connor.e | 7 November, 2017

Why are we trying to make a profit off the federal tax refund? Your used model 3 will not be worth enough to profit. Why would someone pay full price for a used car, when they can option out the car to exactly what they want for the same price?

Syruspicarus2016 | 7 November, 2017

Andy, why people would pay more for the used unit? Just because there is a year long or more backlog. thedrisin, thanks for confirming it. My accountant said the same.

andy.connor.e | 7 November, 2017

If people are willing to pay more for a used model 3 to skip the line (assuming we're talking about the $49k first production model), i wonder if anyone will realize they can just buy a Model S 75D for $75k, and they will GET the tax refund. (assuming they dont wait for people to start taking delivery to make that decision, and they recognize that right NOW). Only 3 month delivery time for MS.

Syruspicarus2016 | 7 November, 2017

Andy, many people would prefer a smaller car. I am one of them. My wife doesnt want the S even if it was cheaper than the 3. Also there is the cool factor; There are lot of people out there willing to pay for exclusivity. They feel good and important if they get their hands on the latest thing ahead of everybody else. No one can tell what the initial resale value will be, but I will advertise on cargurus at 100% the paid price and see what happens. I imagine first quarter 2019 the waiting time for the Model 3 order should be at 3-5 months. Then I buy another one at that time. It is likely improvements will be made at that point anyway. Maybe even a HUD added since lot of reviews as expected are negative on that.

Shock | 7 November, 2017

Let's be real IRS is not chasing down people reselling a car who got the tax credit.

But expecting potentially third party to ignore the fact you already made many thousands back from the tax credit and yet still pay sticker (or more) is unrealistic.

I believe the very first recipients of a model 3 may make a few grand off them tops. Anybody who doesn't have one very, very early on is going to be trying to sell into a market without much demand. Who is going to want to buy a car off ebay or craigslist just to save a few months? Does anybody need a model 3 that badly and if they do that they are going to pay much more than sticker they can just get into model s territory.

Shock | 7 November, 2017

"Also there is the cool factor; There are lot of people out there willing to pay for exclusivity. "

I believe that anybody paying fifty grand or more for a car is probably smart enough to realize that that a) A new model S is already cooler than a model 3, objectively and B) it won't be long before the model 3 is far more numerous than the S. At that point it isn't exclusive. It's just the entry level tesla.

By the time you resell this thing after eating your taxes and dealing with the risk you'll make too little to bother with it IMO.

Syruspicarus2016 | 7 November, 2017

Shock, again that is a personal opinion on which one is cooler; S or 3. I just gave you an example of my wife who doesn't like big cars regardless how expensive they are. Also there is a car blogger who recently reviewed the Model 3. He attributed a "cool factor" higher to the Model 3. Again, I can see many people value the big sedans, no questions. There is also an audience that think otherwise. Personally I have no expectations for resale on the Model 3. I think I could order the Model 3 in few weeks and put a car ad out there on "pre-sale Model 3" and see if people will contact me about it.

Syruspicarus2016 | 7 November, 2017

Plus I have to tell you that in my view, the interior craftsmanship of the Model 3 is superior to the Model S. I have seen both. If the Model 3 is well equipped with nice 19'' wheels and long range, I would take the Model 3 any day. There is also the maintenance factor. There are lot of middle class professionals like me who can afford a BMW 3 or C300 price range car, but we would not want to spend a fortune in eventual repairs of collisions in all aluminum cars like the Model S. That was a big factor for me when I rejected the idea of purchasing the Model S.

thedrisin | 7 November, 2017

@andy.connor.e

S 75D for $75k minus rebate is a difference of $18500. That is significant amount to a lot of people.

karthik.deshpande | 7 November, 2017

@Syruspicarus2016 ,

Is it really a concern I need to worry about? I am 1st day M3 reservation holder but now considering CPO MS or new MS. Do you think in the long term All-Aluminium Model-S will be expensive to own? This is totally new point I haven't thought about.

andy.connor.e | 7 November, 2017

@thedrisin

That is assuming they are NOT paying extra (more than the 1st buyer) for the used M3.

dsvick | 7 November, 2017

@thedrisin - "If you are an individual, not a business, you are not really considered acquiring for resale. "

I would not want to be the one to test the IRS on this ...

andy.connor.e | 7 November, 2017

^
Let me know how it goes. (hopefully not from in prison)

Shock | 7 November, 2017

"There is also the maintenance factor. There are lot of middle class professionals like me who can afford a BMW 3 or C300 price range car, but we would not want to spend a fortune in eventual repairs of collisions in all aluminum cars like the Model S"

Fair point. When out of warranty the S will surely be pricier to keep going than the 3. I know some roadster owners have been out 5-figure amounts on replacing batteries. A full engine replacement in a C300 wouldn't cost that.

Iwantmy3 | 7 November, 2017

If the tax credit is removed in the current bill, the question becomes irrelevant.

However, if the OP believes that he can get one of the very early cars and still sell it at a profit due to its cache, then I would suggest buying the bigger battery. Obviously he is planning to sell to someone with more money then brains, therefore, they will want the most expensive version of the car.

thedrisin | 7 November, 2017

@dsvick

There is no IRS test. The form only asks for date the vehicle is put in service. Fill out IRS Form 8936, attach to your 1040 tax return. Done.

thedrisin | 7 November, 2017

I would assume that most everyone here has collision insurance on their automobile policy. Regardless of what vehicle the policy covers, you only pay the deductible for a repair. Unless you have a very high deductible, you are probably going to go over in most accidents no matter what the construction. Little dings may be different.

Syruspicarus2016 | 7 November, 2017

Hello Karthik, I cannot talk from experience since I decided not to buy the S. That was a big reason I didn't. I did read few articles stating that was the case and contrary to what Andy believe, people had trouble getting the insurance to pay the new aluminum body repair and ended up somehow paying a ton of money from their pockets. Again I don't know if it is fake news or not, but to be honest looking back I am glad I didn't buy it. As long as I have similar range, I am very happy with the size of the Model 3 and investing much less.

bayareakid2008 | 8 November, 2017

I'm pretty sure an insurance company cannot refuse to repair a car that you have insured (unless it's a total loss and they give you a payout)

rxlawdude | 9 November, 2017

@thedrisin, if you INTEND to resell the car when you buy it, you run afoul of the IRS rule. It's black and white.

Caveat emptor to anyone buying a "new" M3 from a profiteer- neither you nor the seller qualify for the credit.

dyefrog | 9 November, 2017

"There is no IRS test. The form only asks for date the vehicle is put in service. Fill out IRS Form 8936, attach to your 1040 tax return. Done."

"@thedrisin, if you INTEND to resell the car when you buy it, you run afoul of the IRS rule. It's black and white."

Folks, it looks like we have us a ball game. Sit back and enjoy.

dortor | 9 November, 2017

at least in California the sale tax makes this pretty much not a good idea

49,000 + 8.25% sales tax = 53042.5 + registration + delivery fees

and who ever buys it has to pay sales tax again for the registration transfer…

are you sure you can make enough money to over come the tax/registration/delivery fees? seems like a losing proposition to me - but what do I know?

Syruspicarus2016 | 9 November, 2017

Hi dortor, in my state as far as I know we pay 0% for the first $35K. Surprised you didnt get that in Cali!

That said, if it is true IRS rules is against sales, I would just get the 220 miles version for commute and leave the 328d for weekend getaway in ski resorts. Now the question is, no one knows if the 220 version will be on time for the fed tax credit.

vaelin | 9 November, 2017

Given the House Tax Bill proposes getting rid of the EV credit, this may all be moot.

Haggy | 9 November, 2017

The IRS may not specify a minimum time that you have to own the car, but they do specify that you can't get the credit if you buy it for resale. It's open to interpretation. If you sell it after a month and claim that you bought it for personal use but needed the money, would that fly? They might not want to go to tax court over it. But if you sell it with 50 miles on the odometer a few days after you bought it, it's hard to make the case that you aren't committing tax fraud.

Anybody who buys it second hand wouldn't get the tax credit or rebates either, which means that if you sell it for break even, it might be attractive to somebody who is sure that the tax credit won't be there if that person waits for a car. But you also have to consider the cost of a used Model S. At retail, even without the tax credit, the Model S can be a good deal. But with a credit available for the Model S and used ones costing even less, many people would prefer a used Model S over a new Model 3 with a jacked up price.

Sales tax depends on where you live. I pay 10%. Break even would be your cost plus taxes, and a person buying it would have to compare that to either waiting or getting a used Model S.

thedrisin | 10 November, 2017

Please post a copy of the IRS form where is shows a line for how long you placed in service before selling the vehicle. The resale rules are really so businesses do not immediately turn around fleet vehicles for the tax credit, not aimed at the individual taxpayer. Syruspicarus2016 accountant agrees. What if you buy the vehicle sight unseen, no test drive, with a non-refundable deposit and don't like it? Or your financial situation changes? Did you intend to sell? There is no reporting of a sale to the IRS. Is someone here going to start calling the IRS on Syruspicarus2016 or ratting out their neighbors? Nice people here.

dortor | 10 November, 2017

If you go to tax court you’ve already lost!

andy.connor.e | 10 November, 2017

Sad that people are more interested in profiting off the government incentive programs, instead of what this EV can do for them.

thedrisin | 10 November, 2017

Best if the IRS calrifies the situation and does not allow incentive until you meet a specific time requirement, perhaps 1 or more years? That way you don't have to call the IRS hotline when your neighbor decides he doesn't want the car.

Haggy | 10 November, 2017

"Please post a copy of the IRS form where is shows a line for how long you placed in service before selling the vehicle."

The IRS doesn't need one. It's called supporting documentation. They can simply ask the question in an audit. Just because they don't ask me to send in copies of my receipts for charitable donations or my bank statements or my sales contract for a car or solar roof or boat doesn't mean that I don't have to show that information to them if I'm audited. It would be a poor excuse to refuse to show the IRS a document on the grounds that it wasn't required when you filed your tax return.

"Best if the IRS clarifies the situation and does not allow incentive until you meet a specific time requirement"

No, it's best for them if they don't. It's intent, not time span. If they said 45 days, then there would be people who sat on the car for 45 days, or perhaps even did the leg work, with the buyer coming by to get the car after 45 days and make the final payment. If you buy the car, register it, use it, and sell it later, it's open ended. There are some cases where there won't be any question, such as when you sell it many months or years later at a loss. Even if you sell it a month later, take an overall loss even if you factor in the credit, and claim that it was because you needed the money or didn't like the car, then the IRS isn't going to question your intent. People don't intend to buy a car, sell it at more than an $8000 loss just so they can get back $7500. If you sold it at a slight profit, but factored in that you had to pay sales tax and go through time and effort, you could argue that a reasonable person wouldn't have had that intent, especially knowing that you would have done better had you not driven it 1000 miles first. There aren't going to be specific guidelines when there are an infinite number of possible scenarios, some of which seem like buying the car for resale and some that don't.

thedrisin | 11 November, 2017

From other Tesla community forums:

"There is no "holding" period that I've seen. There is no limit on how long you must keep the car. So long as it was purchased for by you, the tax payer, and put into use, which is defined as titled by a state to you, then you can claim the credit regardless of what you do with the vehicle from then on. However, no one else may later claim the credit on the same vehicle (no double dipping on the same car). The "not for resale" is intended to prevent dealerships from claiming the credit on cars they flip."

"Im pretty sure it wouldn't be consider for resale as long as you are not a licensed dealer. "

And why would anyone be audited? How would that be triggered? There would be nothing that looks questionable if filed correctly and put into service properly. Unlikely to get audited unless someone decided to call the IRS. Even then, nothing likely to happen. IRS expects filings for the number of allowed vehicles. Unlike a deduction for charity which is open ended and will trigger if you exceed certain parameters.

rxlawdude | 11 November, 2017

I love the curbside "lawyers" who pick and choose the language they want to support their contention that they are not afoul of the law by purchasing a new M3 with the intent to resell it, and keep the federal credit.

For these "lawyers," I offer the following IRS guidance (IR Bulletin) https://www.irs.gov/irb/2009-48_IRB

(1) The vehicle is placed in service by the taxpayer in a taxable year beginning after December 31, 2009, and is acquired by the taxpayer after December 31, 2009;

(2) The original use of the vehicle commences with the taxpayer;

(3) The vehicle is acquired for use or lease by the taxpayer, and not for resale; and

...

Those who are morons and scofflaws will do what they want. You can't fix stupid or dishonest...

thedrisin | 12 November, 2017

This is the current IRS publication for the tax credit:
https://www.irs.gov/businesses/plug-in-electric-vehicle-credit-irc-30-an...

"The vehicles must be acquired for use or lease and not for resale." This is meant for businesses not for individual taxpayers. A business can acquire a vehicle for lease and file for the tax credit. However, the same business cannot acquire the vehicle for resale and receive the credit. If someone purchases a vehicle and then sells it to their child but takes the tax credit will they be audited? Was not the incentive achieved by getting the EV in service? Isn't that the point of the incentive, to encourage purchase of the vehicles?

rxlawdude | 12 November, 2017

Sure. Ignore the law. Good luck.

myoung001 | 12 November, 2017

By the time the standard battery is an option, there won't be much wait.

rxlawdude | 12 November, 2017

My hope is that those who post here that they will sell immediately for profit under the same username as their reservation will see those canceled.

As it should be, both legally (tax credit fraud) and ethically (skirting Tesla's no reservation transfer policy).

thedrisin | 13 November, 2017

Don't get your knickers in s twist. We are just discussing the legal interpretation of a poorly written IRS publication. No one has committed a crime.

Syruspicarus2016 | 13 November, 2017

Rxlaw, I hope the tax credit just goes away fast enough so that tax payers who dont buy a $35K dont have to support that scam. I did read the IRS publication. I intend to keep car as a job commuter.

Syruspicarus2016 | 13 November, 2017

Rxlaw, I hope the tax credit just goes away fast enough so that tax payers who dont buy a $35K dont have to support that scam. I did read the IRS publication. I intend to keep car as a job commuter.

thedrisin | 13 November, 2017

I think everyone who spends time on this forum and has eagerly waited over 18 months already for a vehicle plans on keeping it.

thedrisin | 13 November, 2017

I think everyone who spends time on this forum and has eagerly waited over 18 months already for a vehicle plans on keeping it.

Haggy | 15 November, 2017

There's nothing poorly written about it. It says you can't buy the car for resale purposes. It's about intent. This discussion is about immediate resale. That means that it's clearly being purchased for a reason that does not allow the credit. Even if it takes three months to find a buyer, it's still not allowed if the reason you bought the car was to sell it. How they would know has nothing to do with it. It's a given that this thread is about buying a car for resale. If they never find out about it, that means that the person cheated on taxes.

thedrisin | 15 November, 2017

Thanks for the explanation. So, if your sole intent is to immediately resell to make a profit (good luck), then it is illegal to file for the tax credit. If you don't like the car after purchasing it in good faith, financial situation changes abruptly, etc., there is no intent then. Not too many people here are going to resell after waiting patiently for 2 yrs unless there is a real problem.

Wildcardtaylortesla | 15 November, 2017

Hmm... I fully intend to resell mine after about 15 years. I hope I’m not cheating on my taxes when I claim the credit.

thedrisin | 16 November, 2017

It would be clearer for everyone if the Federal tax credit was like the Massachusetts rebate program which requires that the owner retain ownership for 36 consecutive months after the purchase date.