Trading in a ‘21 Select for ‘22 Premium, pocketing 2X EV tax credits

[heavensbee]

Hi all. I have an order 6 months out for a 22 Premium AWD ER. I have an opportunity to buy a new 21 Select AWD SR for MSRP right now.

Seriously considering buying the select and then selling/trading it in once I get the Premium order. It’s a gamble if the used car market will remain hot in 6 months, but I’m pretty sure I’d be able to pocket 2x $7500 tax credits and would hope to sell the 21 Select for near MSRP. What do you all think? Gamble worth making to get to drive a MME for 6 months while waiting for my build, and pocket an extra $7500? Anybody’s guess where the market will be…

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[Murse-In-Airy]

In the current market, I think you’d be pretty safe for 6 months. Don’t forget you’ll be paying tax, title, registration l, etc twice. So that will eat in to the “profit” of getting two $7500 tax credits. Wouldn’t work so well for me because sales tax etc, would eat almost all the extra money.

 

[Brutakus]

If you were in a state that allowed your trade in value to be deducted from the taxable purchase price of the new car, I'd say 100% go for it. But since you're in DC and its taxed at full price regardless, you really gotta ask if its worth it. Looks like you'd be out about $3.5k in taxes on the new Premium.

Guessing you'd get about $45-50k on the Select depending on mileage and options so you'd be paying $10-15k to get $15k tax credit (and a car upgrade)

Assuming you have enough tax liabilities for a $15k credit, its all about your situation I guess

 

[heavensbee]

I’m actually in MD which allows trade in sales tax credit. Worst case I sell to Vroom or Carvana instead of trade (in case dealer lowballs) and pay sales tax twice, but if I am able to sell for MSRP (prob with less than 4,000 miles) I think it could still be worth it. I just checked my last paycheck from 2021 and had over 15K in federal taxes withheld.

Hoping a Select AWD with standard range battery (no other options) doesn’t have horrible resale value

I would probably use Ford Options for both, and hopefully the $2500 Options bonus cash sticks around.

 

[ahg]

I’m actually in MD which allows trade in sales tax credit. Worst case I sell to Vroom or Carvana instead of trade (in case dealer lowballs) and pay sales tax twice, but if I am able to sell for MSRP (prob with less than 4,000 miles) I think it could still be worth it. I just checked my last paycheck from 2021 and had over 15K in federal taxes withheld.

Hoping a Select AWD with standard range battery (no other options) doesn’t have horrible resale value

I would probably use Ford Options for both, and hopefully the $2500 Options bonus cash sticks around.

The fact that the select is available now for MSRP tells you that it is not as desirable as some other models. If it is not moving at MSRP with the tax credit available why would it sell later for MSRP with no tax credit?

 

[generaltso]

I just checked my last paycheck from 2021 and had over 15K in federal taxes withheld.

That has no relation to your tax liability.

 

[heavensbee]

That has no relation to your tax liability.

Should have clarified that I consistently owe over $15K in federal income taxes based on my returns, not just withholding.

 

[mach_e_hopeful]

I'm gonna attempt to trade in my premium ex awd for another one this year and get the tax credit twice.

I want two fobs badly but out of principle refuse to pay for it. Might as well get a newer car, assuming I get good trade in quote And find a premium ex awd without adm.

I saved 3k in gas this year so going to use that and some mental gymnastics to reason about the things I would pay for twice.

 

[RickMachE]

I'm gonna attempt to trade in my premium ex awd for another one this year and get the tax credit twice.

I want two fobs badly but out of principle refuse to pay for it. Might as well get a newer car, assuming I get good trade in quote And find a premium ex awd without adm.

I saved 3k in gas this year so going to use that and some mental gymnastics to reason about the things I would pay for twice.

Can't possibly make the numbers work on a trade. Private sale, yes.

 

[shadowsjc]

I live in NJ where EVs are sales tax exempt. I got my '21 premium AWD ER at below MSRP (x plan) last year. If i get another one this year it would again be tax exempt.

Would trading it in be a good idea in this case? Just wondering if I'll be lucky enough to find one at below MSRP again

 

[Mach1E]

Hi all. I have an order 6 months out for a 22 Premium AWD ER. I have an opportunity to buy a new 21 Select AWD SR for MSRP right now.

Seriously considering buying the select and then selling/trading it in once I get the Premium order. It’s a gamble if the used car market will remain hot in 6 months, but I’m pretty sure I’d be able to pocket 2x $7500 tax credits and would hope to sell the 21 Select for near MSRP. What do you all think? Gamble worth making to get to drive a MME for 6 months while waiting for my build, and pocket an extra $7500? Anybody’s guess where the market will be…

Keep in mind the select is gonna be the least popular one when it comes to resale (which is probably why you can walk in and buy one right now for MSRP).

Buying a new car and making money on it has only happened 1x in the history of the automobile (now). It will be short lived.

And in 6 months, when others can walk on the lot and buy a 2022 select for MSRP (or less if rebates) WITH a $7500 tax credit, what do you think your USED 2021 will be worth?

Answer? Less than the 2022.

Plus consider your tax, tag dealer and delivery fees (at least a few thousand where I live).

My prediction? This “deal” could cost you $5,000 or more.

 

[heavensbee]

All good points. I actually found a Premium for MSRP nearby which I think will have better resale. I ran the numbers and a private sale will likely be better than a trade in, even taking into consideration the sales tax credit. The big question is whether the market remains the same in 6 months. Given that we are seeing 28 week lead times on premiums for 2022, I think the market holds. In 2023, it won’t, with a big expected ramp up in production.

worst case, the market tanks and I keep the premium and cancel the order.

im going for the double dip on a premium.

 

[Jimrpa]

I’m not sure I would count on the same used car market in 6 months, especially on a 2021 select. They seem to be too readily available.

 

[RickMachE]

I live in NJ where EVs are sales tax exempt. I got my '21 premium AWD ER at below MSRP (x plan) last year. If i get another one this year it would again be tax exempt.

Would trading it in be a good idea in this case? Just wondering if I'll be lucky enough to find one at below MSRP again

Trading in is almost always the worst alternative from a money standpoint, except where sales tax reductions are significant. Some states credit back the entire value of the trade against the purchase, significantly reducing sales tax in a case like this, except that NJ doesn't charge sales tax.

Removing sales tax credits from the equation, it is almost certain that trading in the vehicle is the worst possible option. Check Carvana, Carmax, Vroom, KBB, ... and list it privately for sale. I have not traded in a vehicle since I did Cash for Clunkers, and then in 2013 had a 15 year old Ford Explorer. The beauty of Carvana (can't speak for the others), is that once you get a value and save the account, you get 30 days to act on it, during which time you can attempt a private sale. I almost always sell privately, but this time with my 2018 Fusion Energi I only got 1 bite and they never followed up (largely due to AutoTrader improperly categorizing the PHEV).

When you sell privately you do need to deal with buyers, but there are steps you take to safeguard the process.

I plan on doing exactly this when my 2022 arrives, hopefully in March.

 

[Mach1E]

All good points. I actually found a Premium for MSRP nearby which I think will have better resale. I ran the numbers and a private sale will likely be better than a trade in, even taking into consideration the sales tax credit. The big question is whether the market remains the same in 6 months. Given that we are seeing 28 week lead times on premiums for 2022, I think the market holds. In 2023, it won’t, with a big expected ramp up in production.

worst case, the market tanks and I keep the premium and cancel the order.

im going for the double dip on a premium.

We saw 28 week lead times in 2021, the lead times are getting shorter though (outside of recall or chip hold issues).

Every day there are more and more cancelled orders and used ones available.

You found TWO pretty easily and at MSRP today, in 6 months, I have no doubt the used car market for the Mach E will soften.

Last year the demand outstripped the supply by the most that it ever will and supply and demand will continue to equalize.
If you found the car you want, and don’t want to wait, buy it if you would be happy KEEPING it.

If in 6 months you can somehow trade up to a 2022 and not cost a bunch of money, you could make that decision then.

But I wouldn’t do it if I wasn’t happy with the 2021. Because in 6 months you could have to choose between keeping a car you don’t want and paying thousands more.

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