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Is EAP and FSD taxable after initial purchase?

Discussion in 'Reserving, Ordering, Production, Delivery' started by BrianP, Aug 16, 2017.

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  1. BrianP

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    I'm not planning on buying EAP (and obviously not FSD) during the initial purchase. If I decide I want them, I'll enable them later. The consensus seems to be that I'll pay a $1000 penalty for each of those features if enabled after the initial purchase. Question is, will you pay tax on the $5k/$8k initial purchase, that you won't pay if buy the software upgrade later?
     
  2. SoFlaModel3

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    It's not consensus, it's printed right in the design studio. It's an extra $1,000 for each item after initial purchase.

    As far as taxes, you're going to pay that up front for sure and I have to assume after the fact as well.
     
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    • Vin

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      Good question, but I think it would be taxed as normal sales tax (at least in PA), of like 6-7%.

      Of course another advantage to waiting on EAP/FSD is you could invest the 5k-8k and most likely make the $1000 in a year or two to nullify the extra cost of unlocking it later.
      However, it's tough for me to wait at least for EAP (part of the allure of owning a Tesla), but I also like manually driving so it isn't too hard to wait a little for the feature if saving the 5k initially.
       
    • SoFlaModel3

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      So I'm waiting -- unfortunately EAP just takes the car out of my budget and it's not a must have feature for me.

      If I decide I want it later, I'll get it.

      Many will finance the car. Paying $5,000 for EAP at a low interest rate over 5-6 years will be much easier for some than $6,000 out of pocket will be.
       
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      • Vin

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        Sorry a little off topic, but since you've mentioned financing, just curious if Tesla usually has a prepay early penalty, ie you decide to pay off the financing a year or two earlier. Not that I would do that because 99% of my stocks are making more than 2.74% so I would invest rather than pay off but was just wondering if anyone knows that answer. thx
         
      • SoFlaModel3

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        Tesla is not a bank, so the financing may vary based on location. To that end, it's probably tough to answer.

        I will make sure my financing has no pre-pay penality though.
         
      • BrianP

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        Ok, did a little more research on my question. It looks like it varies by state whether or not non-tangible digital goods are taxed:

        https://en.wikipedia.org/wiki/Taxation_of_digital_goods

        I found a few different posts that state that OTA updates are not taxed in California.

        So depending what state you live in, your penalty for waiting to purchase EAP/FSD may be decreased.
         
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        • MelindaV

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          it would be taxed if you are in a sales tax area... now, living in WA with near 9% sales tax and my Tesla service will be in OR with 0% sales tax... if I were to purchase wheels, service or some other accessory after the fact at the service center it would not be taxed. BUT would something that would be an OTA upgrade if done at the service center? I assume not.... ?
           
        • Steam613

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          @Vin, when discussing your loan with a financial institution ask and look for the phrase "rule of 78's" or "sum of digits". These terms indicate an early payoff penalty or that fees are front loaded and delay payment into the principle. Not that I'm a licensed financial advisor but I would encourage all to seek loans from a credit union. The NCUA has tools on their website to assist in your search.
           
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