Some of you may have done your 2007 taxes already and more may perform well under pressure and prefer to wait till the April 15 deadline. Whatever your preference, one thing is for certain, if you’re considering claiming a tax deduction on the purchase of a hybrid car it is no simple task. It is easier to figure out what makes up your credit score then what your possible tax credit will be for purchasing a hybrid car.
Some things to consider when applying for your tax credit:
- 1. The purchase date of your vehicle
- 2. When you actually acquire the vehicle
- 3. The type of vehicle purchased
- 4. The number sold of that particular type of vehicle
- 5. Whether the vehicle is leased or owned by the purchaser
- 6. Whether the vehicle is new or used
The above factors into what the credit amount of the vehicle is to start and what percentage of credit the buyer will realize upon tax time.
For instance two owners may buy the same model car at two different times of the year and receive the car at the same time but while the first purchaser reaps the rewards of a 100% tax deduction the second purchaser may benefit from 50% or less of the tax deduction.
It is important to note that the credit does not apply to used hybrid vehicles. In the instances that the car is leased you may be out of the credit as the leasing company has the right to claim the credit. Also when you buy is key as in some cases the full credit is only available until a point in time after the manufacturer records the sale of its allowable number of hybrids for a particular make.
Daunting to say the least, if you are considering purchasing a hybrid or alternative fuel vehicle and were looking for the benefits of a tax break you have to plan ahead. You’ll be better served to be prepared instead of surprised when you sit down with your accountant.
For more information, see the IRS Summary of the Credit for Qualified Hybrid Vehicles or their updated information page on Hybrid Cars and Alternative Fuel Vehicles.
