Prius Prime - official prices paid thread

Some info that I think is applicable: in the Tax Cuts and Jobs Act, like-kind exchanges were limited to real estate property only. See here:

Like-kind exchanges now limited to real property | Internal Revenue Service

“Effective Jan. 1, 2018, exchanges of personal or intangible property such as machinery, equipment, vehicles, artwork, collectibles, patents, and other intellectual property generally do not qualify for nonrecognition of gain or loss as like-kind exchanges.”

So I think even though this previously would have been a like-kind exchange, it is now a taxable event.

 

I am pretty sure it makes no difference if you trade it in for another car or simply sell it without getting another car. It is taxable in either case. You need to figure out and report the capital gains in either case, which would result in a tax and increase the cost of your trade-in transaction.

This is now why I am having second thoughts on whether I should trade in, as the capital gains is around $10,000. Besides, I don't like the Titanium Glow, and I really like my Blue Magnetism.

 

Ira Toyota in Danvers MA is (as of a week or so ago) selling Prius Prime LEs for MSRP. They’re just sold out until mid-to-late January.

 

I wonder how to calculate the "depreciation" into the cost basis for reporting the capital gain on automobile sales. Sales tax and other fees should all be included in the cost basis. I would think there is a formula used to calculate the depreciation for business expenses, but would that apply to an automobile for personal use? I have to report my capital gain on my upcoming 2021 tax form for the 2020PP sales. If I simply use the sales price and tax and fees and the tax incentive received, my net gain was roughly $4,000. I think, even after being slummed with the short-term capital gain tax on this amount, I should be getting back most of them again with a $4502 tax credit on my 2021PP purchase.

 

Unfortunately not allowed, unless you use your vehicle for business purposes. Not knowing your specifics, you very well could still come out ahead; your short term gains tax on $4,000 will certainly be less than the new credit.

See here: Topic No. 704 Depreciation | Internal Revenue Service

“The kinds of property that you can depreciate include machinery, equipment, buildings, vehicles, and furniture. You can't claim depreciation on property held for personal purposes. If you use property, such as a car, for both business or investment and personal purposes, you can depreciate only the business or investment use portion.”

 

That was exactly my thought. However, that is a good thing that depreciation does not affect the cost basis. If it does, then I would have more capital gain to report, thus resulting in increased tax. Depreciation is good if claiming the deduction, but not so good when the property is sold for a capital gain.

 

Depreciation for personal use is not allowed. It is only for business use.

Also, you cannot include the sales tax in the cost basis if you itemized your deductions and included it as a deduction—like I did on my return. This would decrease your cost basis, increasing your capital gains tax.

Publication 946 (2020), How To Depreciate Property | Internal Revenue Service

 

Good point. But I don't think I included the sales tax on the car in my tax form. I get a better return with a standard deduction in most years, I believe the same for last year I purchased the 2020PP. In fact, I have never heard of including any sales tax in the deduction? Maybe I have, but I just don't recall any specific sales tax that would have qualified as a deductible item on my tax form.

 

If you are paying interest on your mortgage, along with property taxes and state taxes, it is typically better if you itemize your deductions. Yes, the sales tax on the vehicle is one of the things, along with sales tax for boats, home, and home renovation, that can be itemized, but you need to choose between the sales tax and state and local income tax by checking the box on 5a or not on Schedule A, respectively.

Use the Sales Tax Deduction Calculator | Internal Revenue Service

Note that what the calculator does is that it estimates the total amount of sales tax you paid based on your AGI and Zip code and sums that up with the sales tax on the vehicle, boat, home renovation, etc. that you are claiming. The end result will be more than just the sales tax for the vehicle etc.

 

That use to be the case, but ever since the last tax reform by the previous administration, the itemized deduction does not give me any more tax back into my pocket. It has been that way at least for the last 4 tax returns.

 

Yeah, depends on where you live and how much you owe on your mortgage.

 

Where you are, you are probably paying much more local and state tax than I do. Our mortgage is at the end of term, if I wanted, I can pay it off in a lump sum. But with the current low-interest rate, I am actually making money by keeping the loan because the inflation rate is almost three times the mortgage rate. LOL

 

What a time to be alive!

 

not if you're retired on a fixed income

 

I thought @loaflord was being sarcastic. LOL

 

Yes, very! Didn’t intend to make light of anyone’s struggles.

 

When the federal tax credit starts phasing out on April 1, 2022, the Prius Prime will be an unaffordable car at $35,000. The Corolla Hybrid with the must-have BSM & RCTA is selling for $25,175, which is a much better buy.

Build Your Own Toyota | Toyota Configurator

 

^ Is / will the Corolla hybrid be a hatchback?? I love that car. But that means no 6MT and CVT crap I’m sure

 

Corolla Hybrid is basically the sedan version of the Prius. eCVT is an integral part of the Toyota HV system—the integration of the ICE and two MGs doesn't work without it.

 

All the other "normal" hybrids that Toyota sells is one of the reasons I think there's a decent chance the Prius is nearing the end of the line.

The cool kids have moved on to EVs, and why spend a premium on a Prius when a Corolla is close in size and gas mileage and much cheaper? How big is this market, and does it justify a separate vehicle.

For me, I probably would have bought the Corolla if it had the headroom of the PP (I'm tall and was not comfortable in the C), then again with tax incentives and last year's aggressive rebates, my PP may have been cheaper than the Corolla so who knows...

Also, as a current Saab and former Sonic owner, I seem to be attracted to cars near the end of their run .