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Used tax incentives -- anyone figured out when to sell?

Discussion in 'Prime Main Forum (2017-2022)' started by nickfountain, May 25, 2023.

  1. nickfountain

    nickfountain New Member

    May 25, 2023
    Southern California
    2021 Prius Prime
    Plug-in Base
    So, this one has me scratching my head. I happened to be at the dealership the other day, and I talked to the head used car buyer for them and he was pretty stumped, too. Hoping y'all can help:

    Anyone figured out when to sell their Prime, given the new tax incentives for used EVs?

    The IRS rules state:
    • The car has to be two years old
    • It has to be sold by a dealer
    • For less that $25k
    • And other rules about the buyer's eligibility that I don't care about
    I love my Prime, but if the government is going to add $4k in value to it, I don't love it that much. Problem is: When, given the incentive's structure, does it make sense to sell it to a dealer?

    The dealer will surely want to tag on a few thousand in margin, but they won't want to sell it for more than $25k. So I should sell when the Blue Book value drops to what? $21k? Help me game this out.

    (Bonus if you can game it out given the lots of paint damage we have because we live in the city)
  2. Salamander_King

    Salamander_King Senior Member

    Nov 8, 2015
    New England
    Other Hybrid
    I don't think as a seller, if the dealer is willing to pay you more than the market value, then that is the time to sell. But I don't think any dealer will be taking the "used EV credit" into calculating the car's value. The buyer benefits from the credit, but not so much for the dealer. Most likely, the longer you wait, the less value your car is going to sell. Do you have to replace your PP when sold? That comes into play if you are selling it and buying another car. I flipped my PP three times. The last one was 16mo old 21 PP, traded for $32K to buy a new 22 Ford Escape PHEV. It was sold to a dealer for more than the final cost of the 22 Escape PHEV after incentive and tax credit. Certainly, the dealer was not going to sell it for less than $25K, so the used EV credit had no effect.
  3. PT Guy

    PT Guy Senior Member

    Nov 23, 2016
    Washington, the state
    2017 Prius Prime
    Plug-in Advanced
    The used clean vehicle tax credit is laid out here: Used Clean Vehicle Credit | Internal Revenue Service

    It is pretty simple but with lots of boxes to check. And it is a non-refundable tax credit. If you qualify the credit applies to your total federal income tax for the year of the sale. If the credit is, say, $4,000 and your total tax for the year is less than that (for an example look at your 2022 Form 1040 line 24), all the credit you'll get is the amount on that total tax line. That may get you a nice fat refund, but in this case not the total credit amount.
  4. MalachyNG

    MalachyNG Active Member

    Feb 6, 2019
    Northern NY
    2022 Prius Prime
    You don't benefit from this credit if you're the seller. The buyer after you does. So the best time to sell is when you can get the highest price. I wouldn't put it past a dealership to tell you they can only offer $20k because they won't be able to sell it for more than 25k and they need to feed their families and buyers will only be interested if they can claim the credit... And then put it on the lot for 30k anyway because hybrids are still very popular used.
    Trollbait likes this.