Federal Credit off MSRP

Hi,

Was talking to a sales person at a local dealership as I was getting my car serviced (Atlanta area). I am considering buying a Leaf and I was told that the $7500 credit is deducted off the selling price. This seemed very strange to me since this would allow buyers who don't have $7500 worth of federal tax liabilities to benefit from the entire $7500. The math they too told me would work like this: Selling price of Leaf S model ($32000) - tax credit = $24500 + Georgia Title Fee of $1654 + Dealer Doc fees = Purchase price. Has anyone purchased a leaf like this or anybody at a dealer confirm that it can work like this?

I was under the assumption that I buy the leaf just like any other car and then the tax credits are something I have to final and claim.

Thanks,
Eaton

On a lease the $7500 is off the "Buying" Capital cost. Nissan get the $7500, since they are the owners of the car.

If you are buying the car you get the $7500 when you file your Federal Taxes next year. (As long as you have $7500 in tax liabilities.) (There are way of generating more Liabilities if you don't have them)


The State (GA) 5000$ is applied when you get a certification from GA Dept of Natural Resources, and applied to your 2014 State income taxes (there is a 5year carry on that credit)

BTW, You should not count on Car Sales Ppl for Correct Tax Advice.....

You might want to join these two face book groups.

https://www.facebook.com/groups/evclubsouth/" onclick="window.open(this.href);return false;
https://www.facebook.com/groups/ATL.Leaf.Owners/" onclick="window.open(this.href);return false;

EatonZ26 said:

Hi,

Was talking to a sales person at a local dealership as I was getting my car serviced (Atlanta area). I am considering buying a Leaf and I was told that the $7500 credit is deducted off the selling price. This seemed very strange to me since this would allow buyers who don't have $7500 worth of federal tax liabilities to benefit from the entire $7500. The math they too told me would work like this: Selling price of Leaf S model ($32000) - tax credit = $24500 + Georgia Title Fee of $1654 + Dealer Doc fees = Purchase price. Has anyone purchased a leaf like this or anybody at a dealer confirm that it can work like this?

I was under the assumption that I buy the leaf just like any other car and then the tax credits are something I have to final and claim.

Thanks,
Eaton

Click to expand...

you have it right, the sales person is confused

...and you are correct that if you do not have $7,500 in federal tax liability, then you only get part of the benefit. It cannot be carried forward. So, if you do not have ways to increase your tax liability before end of year (I stopped my 401-k contributions for example, getting the credit dollar-for-dollar beats the employer match of 25c on the dollar), then leasing rather than buying would be a way to consider. The leaseholder gets the deduction, and they typically take the $7,500 off the top of the amount they figure the lease payments on. So, sounds like you were given the explanation of a lease rather than a purchase. Another advantage of lease is the potential that a significantly better battery (hinted/expected for 2016 MY) becomes available in the next two or three years. This would both hack the resale value of existing models, and make a nice path at the end of a 2 or 3 year lease.

Stopping deposits to your 401(k) is a pretty bad way to increase your tax liability. Other ideas include:

- Switch from traditional 401(k) to Roth 401(k) - if it's offered

- Convert money from a traditional IRA to a Roth IRA

- shuffle tax deductions from this year to next year (make a large donation to a charity on Jan 1 of next year instead of spread across this year and next year)