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Federal Tax credit when leasing.

Discussion in 'Model S: Ordering, Production, Delivery' started by Blue Millenium, Apr 4, 2016.

  1. Blue Millenium

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    I just purchased a new model S. Am I entitled to the federal tax credit when I lease through Tesla via US Bank? I ask because I was told it was factored in but could not find it on the paperwork anywhere.
     
  2. SomeJoe7777

    SomeJoe7777 Marginally-Known Member

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    You will not get to claim the credit on your taxes, but the $7500 is supposed to be reflected in the residual value in the lease agreement (i.e. residual value is raised by $7500, so you pay $7500 less in leasing fees over the life of the lease).

    I don't think this is stated anywhere on the lease, so whether the residual value would actually be $7500 lower without the federal tax credit, I don't know.
     
  3. Blue Millenium

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    Ok so please help me through this as I am not a math wiz. In general numbers, if I paid 106,000 and my buyback is 64,000 (61% residual value), it would have been worth 57,000 (54% residual value) so during my lease payments I am using the higher residual value which makes for a lower monthly payment?
     
  4. robert774

    robert774 Member

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    That is correct.
     
  5. Blue Millenium

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    So hypothetically if I want to buy a cpo in 3 years, I would only need to pay 57,000 for an equivalent s90d based on the formula we are speaking about above (54% residual value)?
     
  6. robert774

    robert774 Member

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    Hypothetically I would say yes. Assuming you are within the mileage range, normal wear and tear, etc.
     
  7. brkaus

    brkaus Member

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    The lease states the residual as $64k, so that is what the buyout is... unless they are willing to provide some other terms in writing, I wouldn't count on a lower purchase price.

    If the market value is significantly lower than $64k, then they may be willing, but otherwise...

    I'm not sure too many people have made it to this point to see what is offered.
     
  8. Blue Millenium

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    Very esoteric IMHO. there is no way to know since these beautiful "time machines" have no cpo history. I just want to make sure I was getting my tax credit one way or the other.
     
  9. CUBldr97

    CUBldr97 Member

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    when i leased my nissan leaf, i was entitled to the tax credit.... Im really not sure how you are not entitled to it... the tax credit is for the first person to register the car.... tesla gets their own tax credit for the car... i would dig further... the tax code does state it is for purchased and leased vehicles.
    and depending on the state, you are entitled to a state tax credit as well... and some even allow a tax credit for the purchase and installation of the chargeing equipment
     
  10. Blueeyedme

    Blueeyedme Member

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    Well, I hope you are not audited. You are NOT entitled to the Federal Tax Credit when you lease an EV. State credits are a different thing.
     
  11. patrick40363

    patrick40363 Member

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    The tax credit belongs to the bank/leasing company not you. How they use that credit is up to them not you.
     
  12. BEEZR

    BEEZR Member

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    It would be a lot cleaner -- and ethical -- if in the leasing agreement the $7500 was taken off the top as a capital cost reduction to the sale price of the car. Then, the residual would be more reflective of what the actual value of the car may be in 3 years. And, it would be clear to the buyer... When they don't do this for leases, the $7500 has become profit for the dealers (Tesla excluded)... The dealers are not giving that $7500 to the bank/leasing company, you can bet on that.
     
  13. Lloyd

    Lloyd Active Member

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    You are assuming that the bank has a tax liability for the year that the car was put into service. If they do not have the liability, they cannot claim/use the credit.
     
  14. Blue Millenium

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    Please clarify. Based on a previous post, it mentioned it will be added to my residual value at the end of the lease. If this is not the case and the leasing company said it was "factored in, would that in fact be a misrepresentation?
     
  15. SomeJoe7777

    SomeJoe7777 Marginally-Known Member

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    I believe Blueeyedme was responding to CUBldr97. If you lease, you cannot separately claim the credit on your own tax return like you would if you buy the vehicle. But if the leasing company makes an adjustment to the residual value to equivalently save you the same amount of money, that's fine.

    This rule only applies to the federal tax credit of $7500. Some states have state credits or rebates as well, and they may or may not apply to a leased vehicle.
     
  16. SageBrush

    SageBrush Active Member

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    #16 SageBrush, Apr 5, 2016
    Last edited: Apr 5, 2016
    I've seen it said enough times to believe it: the $7500 is added to the residual value.
    I'm not sure why that method is used, but it sure takes the luster off any thoughts of buying the car at end of lease.
     
  17. Blue Millenium

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    Tks for clarifying
     
  18. Blueeyedme

    Blueeyedme Member

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    I agree 100%. This practice artificially inflates the residual value beyond the expected market value which makes no sense to me. If one wanted to purchase the car at the end of the lease, it's a penalty.
     
  19. brkaus

    brkaus Member

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    One of several reasons I will not be leasing. The tax in Texas is another. This makes the trade in guarantee look like the better option for some, but that also has some cost penalty and should only be viewed as a safety net or an easy walk away.
     
  20. Blue Millenium

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    Well stated. When leasing none of this was explained to me.
     

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