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I have a reservation for a Tesla Model 3 and just found out that my brother recently got a Model X. Tesla says they plan to give priority to previous owners, so I was wondering if it would make sense for him to buy it instead and then transfer the title to me. Would that create additional tax liability? I know that transfers between family members are sometimes not taxed, but that seems to vary by state, so I'm not sure which state's laws I should be looking at. He lives in California, and I live in Washington.

Based on the WA DOL page, I think I wouldn't have to pay tax, but there may be something else I'm not thinking of.

Vehicles received as gifts

  • If you can provide proof that the person who gave you the vehicle or vessel paid sales or use tax on the vehicle or vessel, no use tax is due.
  • Tesla says you can't transfer the reservation to a third party "without their permission." Given that the car is a couple years away and the deposit is 100% refundable, you could give your brother $1k, have him get his priority reservation, and then you have a couple years to forget about it. Tesla is a nice company. There's a decent chance they'd let the reservation be transferred to an immediate family member. Doesn't hurt to try that before going through the red tape and implications of transferring the car after purchase. You can get your $1k back as long as your brother is trustworthy :-) – Rocky Apr 7 '16 at 21:29
  • I've asked around about that option and mostly heard that they aren't in the habit of giving that permission. – Cody Apr 7 '16 at 21:33
  • Are you suggesting your brother buy with his money the car? Or are you going to give him the $30k or so for it? – Joe Apr 7 '16 at 21:42
  • I put in a reservation too! Alas, I don't have a brother with a Model X. I believe family title transfers for cars do not require that sales tax be paid again. Keep in mind CA has higher sales tax than WA, no way around that unless you buy the car first. There are so many Model 3 reservations now, if you made your reservation right away it might not save you much time to go the family transfer route now (he'll be at the back of the line for existing owners anyway). Part of the fun is the anticipation! – Rocky Apr 7 '16 at 21:46
  • @Joe I would give him the money ahead of time. – Cody Apr 7 '16 at 22:13

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