R1S Leasing guidance (Trade in for sales tax exemption - Washington State)

[mannybalboa]

Hi All,

Looking for some guidance and assistance in my situation. I had preordered R1S Dual motor with large pack, 21 inch wheels, Limestone exterior and Ocean coast & dark ash interior. The MSRP was $87500. Earlier this month I found out about leasing earlier this month and locked in a R1S quad motor instead with everything else the same at $95,750. Figured might as well take advantage of $7500 Federal EV credit.
My final payment came out to be $1,568.34 for 24 months for 12K miles with 0 down, EV credit and $1000 deposit.

My problem and frustration is with my trade in. I am trading in my 2022 Tesla Model S Long rage and its assessed trade-in value is $54,506.00 and I owe $56,418.68 on my tesla so a negative equity of $1,912.68. Only reason I am trading in my car is to take advantage of sales tax exemption in Washington state since it will make monthly lease payment ~$100 bucks cheaper.
https://dor.wa.gov/education/industry-guides/auto-dealers/trade-ins


So far the sales guy said I cannot get both Federal EV and state sales tax credit in my lease which I know is incorrect since one is state and other is federal credit. My guide is saying since I have negative equity there is nothing that can be done. Even if that's the case I am more than happy to just put 3-4k down towards my tesla and turn it into a positive equity trade in to get the sales tax credit. I have been going back n forth with my guide and a lead guide for a week but nothing has come out of it. They are helpful but I doubt they understand this unique case. Any guidance is greatly appreciated from the forum folks

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[golden_frog]

I'm confused as to why your equity would matter.

Are you sure that your state gives rebates for leasing? My state does not, but the federal credit is still good to go

 

[mannybalboa]

I'm confused as to why your equity would matter.

Are you sure that your state gives rebates for leasing? My state does not, but the federal credit is still good to go

Exactly, that's my point as well. Equity doesn't matter when it comes to the assessed value of trade in vehicle. I shouldn't have to pay sales tax up to 54k for the leased vehicle. Which in my case would be 0 dollars since the overall lease payment will be much lower than 54k in 24 months.

 

[NineElectrics]

Rivian doesn't know what they are talking about here. You can absolutely get the EV cap. cost reduction as well as the WA tax credit.

However, in your case you don't need to pay taxes on your lease at all, even if you didn't have any tax credits, because the sum of your lease payments is 1,568.34 * 24 = 37,640.16, which is less than 45,000. Any EV lease transaction where the sum of the lease payments is less than $45,000 is exempt from tax (https://www.dol.wa.gov/vehicles-and...ns-alternative-fuel-vehicles-and-plug-hybrids). Qualifying makes and models are at https://data.wa.gov/Transportation/...Eligibility-by-Make-Mo/aug9-4a7g/data_preview (and Rivian is included).

 

[mannybalboa]

Rivian doesn't know what they are talking about here. You can absolutely get the EV cap. cost reduction as well as the WA tax credit.

However, in your case you don't need to pay taxes on your lease at all, even if you didn't have any tax credits, because the sum of your lease payments is 1,568.34 * 24 = 37,640.16, which is less than 45,000. Any EV lease transaction where the sum of the lease payments is less than $45,000 is exempt from tax (https://www.dol.wa.gov/vehicles-and...ns-alternative-fuel-vehicles-and-plug-hybrids).

ah makes sense. let me forward it to my guide

 

[NineElectrics]

ah makes sense. let me forward it to my guide

Say what you want about third-party dealerships, they at least know the laws in their own states...

 

[mannybalboa]

Yeah but for some reason Tesla has figured it out and they can give test drive and discuss pricing but Rivian cant.

 

[240vPlug]

Sounds like you got your answer but unfortunately the guides are basically customer service and while they have some insight into the financials, anything above and beyond a standard transaction is going to be difficult to deal with them on.

Leasing is still fairly new for Rivian as well. So they're not super used to dealing with them.

Hopefully you get it sorted and get to enjoy your new Rivian soon!

 

[Forager]

Yeah but for some reason Tesla has figured it out and they can give test drive and discuss pricing but Rivian cant.

Tesla existed before these non-dealer laws were on the books and then were grandfathered in. Tesla is part of the problem with this situation.

 

[jakz]

Hi All,

Looking for some guidance and assistance in my situation. I had preordered R1S Dual motor with large pack, 21 inch wheels, Limestone exterior and Ocean coast & dark ash interior. The MSRP was $87500. Earlier this month I found out about leasing earlier this month and locked in a R1S quad motor instead with everything else the same at $95,750. Figured might as well take advantage of $7500 Federal EV credit.
My final payment came out to be $1,568.34 for 24 months for 12K miles with 0 down, EV credit and $1000 deposit.

My problem and frustration is with my trade in. I am trading in my 2022 Tesla Model S Long rage and its assessed trade-in value is $54,506.00 and I owe $56,418.68 on my tesla so a negative equity of $1,912.68. Only reason I am trading in my car is to take advantage of sales tax exemption in Washington state since it will make monthly lease payment ~$100 bucks cheaper.
https://dor.wa.gov/education/industry-guides/auto-dealers/trade-ins


So far the sales guy said I cannot get both Federal EV and state sales tax credit in my lease which I know is incorrect since one is state and other is federal credit. My guide is saying since I have negative equity there is nothing that can be done. Even if that's the case I am more than happy to just put 3-4k down towards my tesla and turn it into a positive equity trade in to get the sales tax credit. I have been going back n forth with my guide and a lead guide for a week but nothing has come out of it. They are helpful but I doubt they understand this unique case. Any guidance is greatly appreciated from the forum folks

Out of curiosity, do you have other numbers for this lease? Such as the residual and rent cost?

 

[mannybalboa]

Out of curiosity, do you have other numbers for this lease? Such as the residual and rent cost?

I literally have no other numbers. I don't know the MF or buy out amount. Apparently its only visible when I sign the contracts

 

[Redmond Chad]

Tesla existed before these non-dealer laws were on the books and then were grandfathered in. Tesla is part of the problem with this situation.

I apologize for a long, boring and somewhat off-topic post (so feel free to skip it), but I think it's helpful to understand why Rivian can't sell directly in WA, as that makes the lease and purchase process more difficult for us.

I agree with the first sentence quoted above, but not the second.

It used to be legal to sell cars directly in WA. Then in 2014 the state's dealer lobby submitted a long list of proposed laws, mostly to help protect them from automakers (this is really common). One change in the proposed legislation that almost went unnoticed was something along the lines of changing an "and" to an "or" that would have made it illegal to sell directly. This bill was not initially on the radar of any of the EV advocacy groups.

Lobbyists for automakers obviously examined the bill in detail, and one that was partial to EVs alerted one of my colleagues at Plug In America to the issue. We informed Tesla (who also had been unaware), and I organized a write-in campaign from EV supporters and a drive to Olympia to meet legislators with other EV owners (mostly Teslas, but I think we had a couple of Leafs and a Volt too). We gave rides to several legislators, and dropped in to visit many more. I also testified at the bill hearing.

Tesla had a lobbyist come to Olympia (they had not been involved in any earlier EV legislation in the state), and he and I got a brief chance to convene. Tesla's lobbyist was very clear when speaking to the legislators and the press that it should be legal for any company to sell directly. They did not ask for special treatment.

The legislators that I spoke with that day all said that they hadn't been aware of the effect of this change, that they had never heard from so many constituents on a single issue, and that it should indeed be legal to sell directly.

However...for "expediency" reasons (it was near the end of the session) the legislators just grandfathered in Tesla, and said they'd fix the rest later. Which they (sigh) still haven't. Changing the wording back and allowing all direct sales clearly would have been faster, so there must have been an objection from some legislators (no doubt due to objections from dealers in their districts), though I never heard who was against direct sales. There were always plenty of legislators that were happy to say they were against other bills that could have helped EV sales...

 

[jakz]

I literally have no other numbers. I don't know the MF or buy out amount. Apparently its only visible when I sign the contracts

Thanks for the reply. That is so lame that they won't give you those detail until you sign. How is a person supposed to judge whether the lease is good value without knowing all the numbers? Dumb.

 

[Zoomer]

Another guy here interested in leasing to realize the $7500 credit. I also have a trade in that Rivian offered $30k, which should reduce my state/local retail transaction tax by $2400 (yes 8% in my location). However, when you proceed to the lease details step, Rivian hit me with “Your trade in value exceeds the limit for leasing. To remove your trade in credit, contact us. “ Appears I’ll have to sell my trade in elsewhere and not get the transaction tax benefit. Anyone care to speculate what’s happening?

 

[mannybalboa]

Another guy here interested in leasing to realize the $7500 credit. I also have a trade in that Rivian offered $30k, which should reduce my state/local retail transaction tax by $2400 (yes 8% in my location). However, when you proceed to the lease details step, Rivian hit me with “Your trade in value exceeds the limit for leasing. To remove your trade in credit, contact us. “ Appears I’ll have to sell my trade in elsewhere and not get the transaction tax benefit. Anyone care to speculate what’s happening?

So couple of things
1. Is your trade in fully paid off? If that's the case then your lease payments will probably be less or slightly more than that $30k assessed value.
2. If you are in Washington EV lease/finance payments up to $45k are already tax free.

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