Does anyone know if a used 2006 Prius can be traded in for new 2007 Prius and be allowed 2 tax credits? (Minus the AMT of course.) I bring this up because the dealer I bought my car from was offering 110% on the value of trade ins (not specifically a Prius) for a limited time only. Figuring the value of the car + 10% equals about what I payed for my 2006 Prius in March. (using Kelly Blue Book) Does anyone know if you can claim 2 credits if you buy 2 Prii within one year but do not own them specifically at the same time within the year? If you go with my line of thinking you would see that I would like to try and trade in my 2006 Prius for a new 2007 Prius and make a profit if this is even possible depending on how the Hybrid credit law is written.
Although regulations have not yet been set, it is virtually certain that you will not be able to claim the full credit for the 2006 (under your scenario). It is likely that you will need to own the car for a period of time (e.g. two years) and if you do not, the credit will be recaptured. Assuming the 2007 becomes qualified for the credit (which it likely will, probably $3150, since the fuel economy has not changed since the 2006), and you buy it before September 30, you would get the credit. If you are doing the trade-in solely to try to get two credits, you will very likely end up costing yourself more money (when sales tax is figured in) than if you stayed in your current situation. Again this has not been finalized, but the law is written to prevent people from scamming the system this way, and the IRS will certainly issue regulations to implement the law.
<div class='quotetop'>QUOTE(Taco Mel @ Sep 9 2006, 07:39 PM) [snapback]317126[/snapback]</div> In many states you don't pay tax when you trade in (only the difference)
You have to hold onto the car for X amount of time to claim the tax credit - I've seen people say that X equals as long as three years(!), though haven't investigated fully myself. It's certainly longer than what you're talking about here, though.
<div class='quotetop'>QUOTE(glenhead @ Sep 11 2006, 10:27 AM) [snapback]317676[/snapback]</div> The Energy Policy Act of 2005 clearly states that there shall be some form of recapture on the sale of a vehicle to which the credit was applied. The IRS was given the responsibility for coming up with the recapture provisions and has not published any guidance. So, the law states there is a recapture, but there's no guidance to tell us how it is applied. Buying and selling quickly is likely to result in a recapture of some or all of the credit.
Newbie here, and my wife mostly drives the car, so take this with a large grain of salt. The $3150 for the 2006 ends 9/30, dropping to $1575. Based on what I have read I don't think the 2007 will have a credit above that amount and may not have a credit at all. YMMV, Doug '06 pkg.3 <div class='quotetop'>QUOTE(Taco Mel @ Sep 9 2006, 06:39 PM) [snapback]317126[/snapback]</div>
