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Discussion Starter · #1 ·
OK, according to Toyota, the just-passed energy bill means that the purchaser of a Prius in 2006 will qualify for a $2,400 tax CREDIT. By using the current $2,000 deduction you don't pay taxes on $2,000 which saves about $600, if you are in the 30% tax bracket. Further, if the Alternative Minimum Tax hits you, deductions are worthless anyhow. However, the credit knocks $2,400 right off the top of your tax bill.

So, (here's the complicated part), what do I do? I ordered a Prius 10 weeks ago and am told it will be here in 2-3 weeks. If I honor my promise to buy it now I lose $1,800 (difference between the $2.4K credit and $600 savings due to the $2000 deduction). If I walk away from the deal I forfeit my $500 deposit (I am an attorney and have carefully scrutinized the contract as well as Ohio's Consumer Protection laws). I also pay any increase in the price of the '06 Prius. Still, I should be about $1,000 ahead.

Is there an in-between position? Can I ask the dealer to hold the '05 and purchase it on 1/2/06?. Can I lease it now and then buy it 1/2/06 (or will it be a used car and not qualify for the credit)? Are there other options? Ideas? I am happy to put the full purchase price into a dealer escrow now as a measure of my good-faith intention to buy on 1/2/06.
 

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Discussion Starter · #3 ·
I am honoring the contract by paying the $500 penalty it provides for in event of cancellation. If it did not have that escape clause, which Toyota added, not me, I would be stuck and would abide by its terms.
 

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Is there an in-between position? Can I ask the dealer to hold the '05 and purchase it on 1/2/06?. Can I lease it now and then buy it 1/2/06 (or will it be a used car and not qualify for the credit)? Are there other options? Ideas? I am happy to put the full purchase price into a dealer escrow now as a measure of my good-faith intention to buy on 1/2/06.

You're a lawyer, why don't you read the bill? I very certain the credit only applies to new car purchases, so leasing then buying would not qualify. But I am not sure if I saw that leasing a new car does qualify.

I have heard of only a few dealers that would refuse to refund deposits. Not doing so, with the demand of the Prius as it is (though it may slump until Jan 1st.) is really playing lowball.
 

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cheese and rice.....
Your a lawyer.....making good money........This decision really shouldn't be that complicated.....should it?
If you knew it was non-refundable when you wrote the check....what's the problem?
Life's pretty short......quit agonizing over a few hundred dollars..... :wink:
 

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2far4gas said:
Is there an in-between position? Can I ask the dealer to hold the '05 and purchase it on 1/2/06?. Can I lease it now and then buy it 1/2/06 (or will it be a used car and not qualify for the credit)? Are there other options? Ideas? I am happy to put the full purchase price into a dealer escrow now as a measure of my good-faith intention to buy on 1/2/06.
Couldn't you just tell the dealer that "due to unforseen circumstances" you cannot purchase the car this year? Tell them you still want to buy a car from them and they can hold onto the deposit and apply it to your purchase in January. It's already August. January isn't that far away.

I don't think they'll have a problem selling the car that's coming in to someone else. And I don't see why they'd be upset about it, as long as you eventually purchase from them.


DGstan
 

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Discussion Starter · #7 ·
Thanks for the love guys. My dealer has agreed to give me back the $500 deposit and accept a re-order for an '06 to be delivered in early January. (Based on the responses to this post, I didn't mention to him that I was an attorney).
 

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where did you get the credit info from Toyota? Their tax page still only lists the same Clean Fueled Vehicle deduction, $2000 for purchases done in calendar/tax year 2005, and $500 for purchases in calendar/tax year 2006.
http://www.toyota.com/vehicles/2005/prius/tax.html

Note that the deduction is for purchases of new vehicles. (not leases, not used, but purchase/financed vehicles.)

so no, you can't lease one now, buy it later, and get the deduction. Leases don't count, and when you buy it it'd be a used vehicle that also doesn't count.

and yes, depending on your income, you may be hit with AMT, making the Clean Fueled Vehicle deduction irrelavant to you.


meanwhile, what is the cost difference to you for continuing to drive your current car? Differences in fuel costs, insurance costs, and depreciation (extra miles put on while waiting for a 2006 would lower trade-in value)?
 

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Mrv, Mrv, Mrv,

Been on vacation lately? New energy bill was just passed, and issues a credit for hybrids based on their percentage increase in MPG over MY 2002 averages within weight classes.

I unfortunately don't have the link to the actual bill. Someone mentioned that only a limited number of vehicles for each manufacturer gets the credit, but I hadn't read that.
 

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Discussion Starter · #10 ·
The news section on Yahoo's home page section discussed the new energy bill this am (that news blurb is gone now) & quoted a Toyota spokesperson regarding its effect on '06 Prius's.
 

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DanMan32 said:
Mrv, Mrv, Mrv,

Been on vacation lately? New energy bill was just passed, and issues a credit for hybrids based on their percentage increase in MPG over MY 2002 averages within weight classes.

I unfortunately don't have the link to the actual bill. Someone mentioned that only a limited number of vehicles for each manufacturer gets the credit, but I hadn't read that.
No, no vacation yet. :(

My basics with the Energy Bill is that I'll believe it when I see it officially for the Prius. Either a tax tip from the IRS, or an official page from Toyota. So far, I haven't seen one, so it's all sort of speculation as to whether the Prius will qualify for the newly passed credits or not. However, the Clean Fueled Vehicle deduction does not change.


another page from Toyota (from their FAQ section hosted at custhelp.com):
here


I believe that this is the quote that you are mentioning, from a USA Today story (linked to from news.yahoo.com)
here
and
here


The break is due to expire at the end of 2009, but it could cease a lot sooner for some models. That's because of a provision that allows the tax breaks for just 60,000 vehicles from each automaker.

Toyota expects to sell 100,000 of its high-mileage Prius hybrids this year alone but still supports the credit. "Hybrids only account for 1% (of new vehicle) sales, so there is still a need," spokeswoman Martha Voss says. She says Prius could qualify for at least a $2,400 credit.
the "could qualify" doesn't sound very definitive to me, and I wouldn't place any bets or base my purchase decision on some handwaving by a spokesperson.
 

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I didn't view any article, I viewed a PDF of the bill itself.
Assuming it becomes law, there's no reason the Prius wouldn't qualify. Much lesser vehicles would qualify. The criteria is:
Gasoline/electric hybridization.
Each weight category has a MY2002 average MPG. Factor the percent increase in MPG for the vehicle in question, to the 2002 avg MPG for the same weight category.
Based on the percentage increase, a table indicates your credit.

The problem is that it is limited to 60K per manufacturer. This year, Toyota exceeded that number mid July for Prius alone. Then you have to consider sales of Highlander, and any other hybrids Toyota comes out with, so the cap will be reached early in the year.
 

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From today's USA Today

"Starting next year, hybrid-car buyers will be eligible for tax credits ranging from $1,700 to $3,000. The credit will be tied to two components: hybrids that save the most fuel compared with 2002 models, and the vehicle's estimated lifetime fuel savings.

"The credit will take effect Jan. 1, replacing the existing $2,000 tax deduction for hybrid vehicles. That deduction was scheduled to fall to $500 next year.

"Because a tax credit is worth more than a deduction, the law provides a greater incentive to buy a hybrid after Jan. 1, according to an analysis by CCH, the tax publishing company."

But there's a potential penalty for waiting too long to buy. The law limits the tax credits to 60,000 vehicles from each automaker, so credits on popular models could disappear well before the tax break expires at the end of 2009.
 

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The other thing to worry about is a price increase for the 2006 model year. That might negate the tax savings. (We won't know for sure, of course, until Toyota tells us what they plan to charge.)
 
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