Possibly not able to use Tax Rebate - Should I still go through with the purchase?

[DE-MME]

Hi Ya'll - Ordered a Rt 1 with Ext. range, RWD in late November, 2021. Delivery..., well, whenever Ford get around to it.

Job situation drastically changed recently and now the $7,500 Federal tax credit may no longer be within reach (some lesser amount possibly, but significantly lower). Without the full (or close thereto) Federal tax credit, the purchase no longer makes economic sense.

Should I cancel the order (and, I guess, loose my $500 deposit, I can live with that), or go through with the purchase and resell when I get it?

I should add - I am in Delaware, we are a 2-car family with a Chevy Bolt and a Subaru Outback, so we don't NEED the MME, but, damn, I was looking forward to driving the MME. The Sub would be sold to my son who needs a newer, reliable car.

Thoughts? Opinions? Advice?

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[Guppydriver]

Do you have a traditional IRA or other account you can simply transfer to a Roth? This will generate taxable income now that can be negated with your EV credit. It won’t be money in your pocket , but the Roth IRA is taxed up front , so in essence the Mustang is paying your taxes. Just a thought ..

 

[macchiaz-o]

Leasing instead of buying may make sense for you, especially if you think you may keep it only 2 or 3 years. By leasing you'll still get some of the benefit of the tax credit.

By buying and immediately reselling, lose out on the entire credit. The person buying it from you won't get it, either. They should expect to pay at least $7,500 less than new value as a result.

 

[Triggerhappy007]

I thought the $500 deposit was refundable? I would wait closer to delivery and decide what to do. Maybe you'll have enough tax liability if it's delivered late in the year.

 

[RickMachE]

How does $7,500 make it make economic sense? I cannot imagine that.

 

[ARK]

How does $7,500 make it make economic sense? I cannot imagine that.

Gotta draw the line with the budget somewhere.

 

[connoisseurr]

If you don’t do your own taxes, consult with your preferred tax advisor regarding estimated liability - you may still qualify.

Fellow DE resident here, also with a Subaru Outback. As an FYI, you are eligible for a state cash rebate of $2500 in Delaware. This has no bearing on tax liability.

 

[AKgrampy]

From what I have read the $7,500 tax credit should remain available to cars purchased this year based on projected manufacturing schedule. I ordered my MME before I knew about the credit so in a way it does not matter to me but I would still like to get it! I would actually use the refund to purchase an e-bike as mountain biking is beginning to kick my over 60 butt!

 

[connoisseurr]

From what I have read the $7,500 tax credit should remain available to cars purchased this year based on projected manufacturing schedule. I ordered my MME before I knew about the credit so in a way it does not matter to me but I would still like to get it! I would actually use the refund to purchase an e-bike as mountain biking is beginning to kick my over 60 butt!

OP’s tax liability may have changed due to employment - nothing was spoken about the tax credit going away.

 

[yngwenli]

It's really your call what you should do honestly. Only you know whether $7500 has an impact on your financial situation as well as your own car situation.

At the end of the day, no matter what, it's "only" a car still. In 10 years, when it's now old and lacking, it won't be very special anymore when all modern EVs by then maybe 300-500 miles minimum, much better tech, faster recharging, etc...

For me personally, I would feel bad that most people buying this got a $7.5k rebate that I didn't. I wouldn't move forward with it, especially if I didn't need a car right away, but that's just me and only you know you.

 

[RedStallion]

Perhaps you have a family member with enough tax liability. You can arrange with them to purchase and pay. Then as far as I know, transfer of the vehicles between family members is tax free.

 

[dbsb3233]

If it's your tax liability that may no longer reach $7500 this year (to apply the whole credit), there may be ways to increase your tax liability (depending on your situation). Consult a tax expert if you're not familiar and confident with it all, of course.

One example is withdrawing some cash from an IRA or 401(k). If over 59.5yo, that's an easy choice as there's no penalty. If under 59.5yo though, probably not although it's a closer call. There's a 10% penalty, and that may eat up much of (or even more than) the tax you get to write off. Tricky to thread that needle on the amount too.

Stopping/reducing tax-deferred contributions for the rest of the year is another method (although you never want to leave company-match money on the table).

Converting IRA money to Roth IRA is another.

But again, consult a professional if not sure how to do any of that.

 

[leeman]

There are no rebates it's a tax credit if you're able to use it. But it's really not the reason by it anyways

 

[nvabill]

Leasing instead of buying may make sense for you, especially if you think you may keep it only 2 or 3 years. By leasing you'll still get some of the benefit of the tax credit.

By buying and immediately reselling, lose out on the entire credit. The person buying it from you won't get it, either. They should expect to pay at least $7,500 less than new value as a result.

Define "immediately reselling", is it 1 day, 2 days, three days, a week, 2 weeks, a month, you get the picture? This is an extremely grey area of the law and would be hard to prove one way or the other if the purchaser buys and sells in a short period of time.

 

[macchiaz-o]

Define "immediately reselling", is it 1 day, 2 days, three days, a week, 2 weeks, a month, you get the picture? This is an extremely grey area of the law and would be hard to prove one way or the other if the purchaser buys and sells and keeps their mouth shut as to intent.

OP said:

Job situation drastically changed recently and now the $7,500 Federal tax credit may no longer be within reach (some lesser amount possibly, but significantly lower). Without the full (or close thereto) Federal tax credit, the purchase no longer makes economic sense.

With that logic, buying and reselling the car doesn't make sense to me -- even if one has different views than me on morals, ethics, or laws.

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