Bush "$4000 tax CREDIT for hybrid purchases" (!?!)

Re: Bush "$4000 tax CREDIT for hybrid purchases" (

<div class='quotetop'>QUOTE(llclar\";p=\"91079)</div>

I have been lurking on this site for months. But just had to comment about this to see if we could get a more definitive answer. This is my first post here.

I called my dealer whom I hope to purchase a Prius later this year. When I posed the question about the tax deduction his response was:

"and are you the owner when you take out a $25,000 loan from the bank to get the Prius?" The point being your name is on the Lease just like it would be if you purchased it but with the banks name on it as well. Or are you saying that you don't qualify for the tax rebate even if you take out a loan?

Anyone really know?

By the way, I want to be able to lease the Prius knowing the resale price will stay high when I decide to buy it at the end of the lease period. Then I will merely take the difference between the lease end buyout price and what I can really sell it for and apply the profit to a newer leased Prius. As long as the price of gas goes up I figure the resale price of a this vehicle will stay up. This way I will not have to deal with the issue of having to replace the battery. And the price will continue to go up, won't it? But I wander.....

Again, the question is about being able to take a tax deduction if you lease the Prius.

 

Re: Bush "$4000 tax CREDIT for hybrid purchases" (

<div class='quotetop'>QUOTE(Three60guy\";p=\"91256)</div>

I'm confused. If the value of the Prius remains very high after the end of the lease, won't that value go to the person that owns the car? ie, to the dealer? Do they give you a buyout price when you start the lease? And is that byout price really low? If they do give you a buyout price at the start, do you mind my asking what it is? You may be on to something here.

It seems to me that its better to lease something that loses it's value rapidly. Thus all of that loss goes to the owner of the vehicle, ie the dealer that is leasing it to you. They own the vehicle, they own the depreciation. it. But for vehicles that lose value slowly, all of that saved value goes to the dealer, not the lessee.

And as for the batteries, they are guaranteed for 8 years and Toyota doesn't make things that die the week after the warranty is up.

 

You definately DON'T get the deduction if you lease, according to the IRS rule.

Isn't the buyout price adjusted according the vehicle's resale value, to minimize the long term risk to the leassor? So if the car keeps its value well, your buyout price is higher as well?

If you want to flip your car every 2-3 years, sounds like the way to go, since you'll drop a lot of cash regardless with so many new cars. If you're planning on holding it 5-6 years (on the battery assumption above) purchasing has been shown to have lower costs.

 

Re: Bush "$4000 tax CREDIT for hybrid purchases" (

Hello,
Not a dumb question at all.The AMT or alternative minimum tax was set up in the late 70's to prevent very very high earners from deducting much of their earnings.It was meant to ensure that they would pay their fair share of tax.It basically disallowes all of your deductions and puts you into the 28% bracket with no deductions except for home mortgage and property taxes.You must compute your taxes the normal way and with the AMT,whichever is worse for you is the one you must file.The AMT is the most unfair part of our tax code because it was never adjusted for inflation!!!!.Depending on your job and the number of deductions,even having too many children can through you into the AMT costing you much more in tax.Many people who earn less than 100K(total family earnings)are finding themselves victims of the dreaded AMT.The $2000 deduction is not allowed if you must file using the AMT numbers.This deduction should not even enter into your decision whether or not to buy this car.At best it is worth $700 in real money.Hope this helps.....Lorin

 

The deduction does not apply to leases because when you lease you are not purchasing "all" of the car.You are paying for the depreciation of the car for a certain number of years plus interest.If you buy the car at the end of the lease it still does not work....the $2000 deduction is scheduled to expire after 2005.

 

Well here is a pretty definitive answer. Yesterday (Friday) I called the IRS and they confirmed that if you lease a Prius you would not be able to use the deduction. Dang.

2nd....

For Prius04:

Yes, when you lease a vehicle you will get a buy out price. For example, if you lease a Prius today you may get a buy out price of something like $10,000. The point I was making was if you took advantage of this low buy out price AND IF the Prius continued to have a REAL higher market price you could possibly buy the vehicle for the buy out price of $10,000 and turn around and sell it for say $20,000. Instant $10,000 profit. Then take that $10,000 and use that as a down payment on a new one. In lease terms they call it a Capital Cost Reduction.

I am wondering if anyone has done this yet. If this works out it would be better than getting a tax deduction and you could get a new Prius every 3 or 4 years depending on the lease duration.

 

Re: Bush "$4000 tax CREDIT for hybrid purchases" (

<div class='quotetop'>QUOTE(tstreet\";p=\"90615)</div>

This is something that always rubs me the wrong way. Just because you don't see any "need" for performance, why get all worked up about others that do want more performance out of their vehicles?

IMO, the Accord hybrid is a great marketing strategy. Better than v6 performance, along with the economy of the four banger, will make it much easier for the buyer to pony up the extra cost of the hybrid system. You need to look at it this way, these buyers are not going to be shopping for the base engine, they will buy the regular V6, and use more fuel. Toyota is going down the same path with the Lexus RX400h, GS 450, and the Toyota Highlander. I wouldn't be a bit surprised to see the '07 Camry hybrid marketed in the exact same fashion, since Honda marketed the Accord in this manner, and are direct competition.

If this is the way to get overall fuel consumption down, then personally, I'm all for it. If I needed a midsize car, I'd be giving the HAH a good hard look.

 

Re: Bush "$4000 tax CREDIT for hybrid purchases" (

<div class='quotetop'>QUOTE(Wolfman\";p=\"91586)</div>

No, it's not the same.

The Toyota/Lexus hybrids all reduce smog-related emissions. Accord-Hybrid doesn't.

I'm strongly against any hybrid that only promotes an efficiency gain. So I speak out to prevent people from falling from "greenwashing". Quite a number of Civic-Hybrid owners purchased their car under the impression they were doing something to help the environment, only to find out later that a traditional Civic has the same ULEV emission rating. That kind of disappointment is a buyer's regret we can help prevent... and ultimately help to clue Honda in that smog-related emissions are a desired purchase aspect too. Perhaps things will improve in 2006.

In other words, I don't believe full credit $$$ should be given for a hybrid that only satisfies one of the two requirements: emissions *AND* efficiency.

 

<div class='quotetop'>QUOTE(Three60guy\";p=\"91485)</div>

Given that some people are selling year old Prii with 10 or 12K miles for at least the MSRP they paid, I doubt the buy out price will be anywhere near that low on a 3 or 4 year lease. The buy out price is based on expected resale value at the end of the lease.

 

bruceha_2000:

I actually did homework before suggesting the $10,000 figure. Here are some actual numbers I received from my local Toyota Dealer:

Prius 4 year lease:
Residual Value (buy out price) = $10,213.00

Prius 3 year lease:
Residual Value (buy out price) = $12,500.00

These numbers were given to me a few weeks ago but I doubt they have changed all that much.

Real world numbers are not represented in current lease programs. That is why I am considering this and would work out for us who are interested in the Prius.

The only way this would not work out is if the resale value of the Prius would go down because of more hybrid models on the market by both Toyota and other car makers. This would reduce demand for the Prius causing the current price support to faulter.

If you are going to get a Prius anyway, then going the lease route would give you much lower monthly rates with the possibility of greater than average resale value at the end of the lease.

 

Re: Bush "$4000 tax CREDIT for hybrid purchases" (

<div class='quotetop'>QUOTE(john1701a\";p=\"91590)</div>

No, it's not the same.

The Toyota/Lexus hybrids all reduce smog-related emissions. Accord-Hybrid doesn't.

I'm strongly against any hybrid that only promotes an efficiency gain. So I speak out to prevent people from falling from "greenwashing". Quite a number of Civic-Hybrid owners purchased their car under the impression they were doing something to help the environment, only to find out later that a traditional Civic has the same ULEV emission rating. That kind of disappointment is a buyer's regret we can help prevent... and ultimately help to clue Honda in that smog-related emissions are a desired purchase aspect too. Perhaps things will improve in 2006.

In other words, I don't believe full credit $$$ should be given for a hybrid that only satisfies one of the two requirements: emissions *AND* efficiency.[/b][/quote]

This may be the case, however Honda has the distinction for being the "greenest" carmaker in the industry. Toyota's trucks and SUV's all have the distinction of being just as "dirty" as the domestic automakers that everyone loves to run through the meat grinder every day.

 

Right now Kelly Blue Book (KBB.COM) has the 2001 Prius for sale by private seller for 14000 and for 12000 as a trade in. Thats a 4 year old car. So you may indeed be onto something here. I'm a bit surprised that they will give you the buy out price now, but then I've never gotten a leased car. So I don't know how it works.

 

It's likely resale for Priii will go down as availability goes up. Putting new ones on the lot for dealer inventory is going to definately drop the price. While it's possible resale will remain constant, you'd be taking a big risk that over 3-4 years. That is, if you're buying the vehicle JUST for this purpose.

 

The way a lease works is you pay for only the period of time you have the vehicle. So, if that is true they must tell you what it is worth at the end of the lease by stating it in the contract. Your monthly payments are based on that buy out price. Your purchase price minus the buy out price divided by the number of months of the lease plus interest. That is the simple description. That is why you see lower monthly payments with a lease.

By the way, the buy out price listed earlier was from Toyota. And if Toyota decides to increase the buy out price to more reflect the real world value then a person leasing the car would make out even more because they would be paying even less of a monthly payment due to the fact the buy out price would be higher. So, MSRP minus higher buy out would equal lower per monthly payment.

So, I really don't care if they increase the buy out price or not. If the real world price stays high people who lease the Prius will make out like bandits. Again, the only risk is if the real world value of the Prius goes down with additional competition. But only time will tell the answer for that.

Cheers