markcmann
Posts: 145
Joined: Sun Jun 23, 2013 9:31 pm
Location: Southern California

$7500 Federal Tax Credit on Leased Spark EV's

Sun Aug 18, 2013 9:47 pm

There seems to be some conflicting information regarding the eligibility of claiming the 'Qualified Plug-in Electric Drive Motor Vehicle Credit' on your fedreal income taxes as the IRS 8936 form states the following requirement must be met:
"You are the owner of the vehicle. If the vehicle is leased, only the lessor and not the lessee, is entitled to the credit."
But on my lease agreement there is no mention of the $7500 credit being applied to the lease?

I've read the following article that speaks to the fact that "Compliance Cars" are the exception to this rule:
http://www.csmonitor.com/Business/In-Ge ... tax-credit

Obviously I would not take anyone's advice as the final word on what is legal to claim on my taxes but rather I'm just trying to shed some light on the confusion. Does anyone have any real world experience with this issue?

Electricbowtie
Posts: 95
Joined: Tue Jul 30, 2013 5:04 am
Location: Los Gatos Mtns, CA

Re: $7500 Federal Tax Credit on Leased Spark EV's

Mon Aug 19, 2013 4:12 pm

No leases are not eligible for the fed credit and the dealer gets it instead. If you lease for 3 years, you still get the state rebates though (i.e. CA $2500).
2012 Cyber Gray Volt (EV best = 51.5 miles)
https://www.voltstats.net/Stats/Details/1192

2014 Electric Blue Spark EV (EV best = 79 miles (16.6kwh) with 15 to go)
http://www.voltstats.net/SparkEV/Stats/Details/4223

markcmann
Posts: 145
Joined: Sun Jun 23, 2013 9:31 pm
Location: Southern California

Re: $7500 Federal Tax Credit on Leased Spark EV's

Tue Aug 20, 2013 7:51 am

Electricbowtie wrote:No leases are not eligible for the fed credit and the dealer gets it instead. If you lease for 3 years, you still get the state rebates though (i.e. CA $2500).
If that is the case, why is the rebate not noted on the lease agreement? Seems like it would have to be disclosed in the terms of the lease? But that is basically the way I understand the issue as well. Thanks

TonyWilliams
Posts: 572
Joined: Sun Apr 14, 2013 4:23 pm

Re: $7500 Federal Tax Credit on Leased Spark EV's

Tue Aug 20, 2013 10:11 am

markcmann wrote:
Electricbowtie wrote:No leases are not eligible for the fed credit and the dealer gets it instead. If you lease for 3 years, you still get the state rebates though (i.e. CA $2500).
If that is the case, why is the rebate not noted on the lease agreement? Seems like it would have to be disclosed in the terms of the lease? But that is basically the way I understand the issue as well. Thanks
The finance company for your lease OWNS the car and is eligible for the $7500 federal tax credit. You are not.

Virtually ALL manufacturers pass on that $7500 to the leasee as a CAPITALIZATION reduction. In other words, if the MSRP on your car is $30,000, then they would lower the capitalization (sales price to the leasing company) to $22,500 for calculate the lease.

GM may not do this. WARNING - CAVEAT EMPTOR - some dealers will sell you a "used" car with almost zero miles so that they will take the $2500 California rebate and $7500 federal tax credit.

GM dealers were doing this a lot when the Volt was first released, but it still happens to unaware and unsuspecting buyers.

$7500 federal credit (IRS form 8936) applies to new cars only with purchase only (not a lease). You get this when you file IRS form 8936 with your federal taxes. No carryovers to the following tax year, so you need to owe the IRS at least $7500 this year.

$2500 California state credit for lease or purchase; Apply here. Obviously, out-of-state buyers don't get this, but instead you will get your state or local government incentives.

Since the car is only sold in California or Oregon, anybody else who wants a Spark EV will have to ship it.
Contrary to many folks here, I do NOT own a LEAF.

fengshui
Posts: 145
Joined: Fri Aug 09, 2013 3:04 pm

Re: $7500 Federal Tax Credit on Leased Spark EV's

Tue Sep 03, 2013 8:23 pm

TonyWilliams wrote:
markcmann wrote:
Electricbowtie wrote:No leases are not eligible for the fed credit and the dealer gets it instead. If you lease for 3 years, you still get the state rebates though (i.e. CA $2500).
If that is the case, why is the rebate not noted on the lease agreement? Seems like it would have to be disclosed in the terms of the lease? But that is basically the way I understand the issue as well. Thanks
The finance company for your lease OWNS the car and is eligible for the $7500 federal tax credit. You are not.

Virtually ALL manufacturers pass on that $7500 to the leasee as a CAPITALIZATION reduction. In other words, if the MSRP on your car is $30,000, then they would lower the capitalization (sales price to the leasing company) to $22,500 for calculate the lease.

GM may not do this. WARNING - CAVEAT EMPTOR - some dealers will sell you a "used" car with almost zero miles so that they will take the $2500 California rebate and $7500 federal tax credit.
From my paperwork, it looks like GM and US Bank (their preferred lease bank) are incorporating the $7500 tax credit as an inflated residual value. My lease had a residual value of over 70%, compared to a residual of 48% on the standard 36-month LEAF lease. My conjecture is that this lets them double-dip on any customers who fall in love with the vehicle and want to exercise the purchase option. A bit scummy, but if someone wants to exercise their purchase option, they'll hopefully just buy a new 2017 Spark EV, if they exist.

TonyWilliams
Posts: 572
Joined: Sun Apr 14, 2013 4:23 pm

Re: $7500 Federal Tax Credit on Leased Spark EV's

Wed Sep 04, 2013 11:07 am

fengshui wrote:... My lease had a residual value of over 70%, compared to a residual of 48% on the standard 36-month LEAF lease. My conjecture is that this lets them double-dip on any customers who fall in love with the vehicle and want to exercise the purchase option. A bit scummy, but if someone wants to exercise their purchase option, they'll hopefully just buy a new 2017 Spark EV, if they exist.
A new twist to an old game... Caveat Emptor!
Contrary to many folks here, I do NOT own a LEAF.


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