Tax credit?

[MP3Mike]

I would have only gotten a little over 1k of the rebate based on this years taxes, the Model 3 is quickly becoming too expensive.

The tax credit isn't free money, you have to have earned enough to cause you to owe at least that much in tax. (So you have actually earned the whole $7,500 if you get it.)

I might agree that if someone doesn't qualify for much of the tax credit that the car is likely too expensive for them. (But not always, there are cases where that wouldn't be the case.)

 

[aarons23]

The tax credit isn't free money, you have to have earned enough to cause you to owe at least that much in tax. (So you have actually earned the whole $7,500 if you get it.)

I might agree that if someone doesn't qualify for much of the tax credit that the car is likely too expensive for them. (But not always, there are cases where that wouldn't be the case.)

I sort of agree that it isn't "free money", however, if this isn't somewhat true then why do you express it as your car will be less $7,500 everywhere. If that is the case they should change it to, if applicable, and not advertise it like it's "free money".

 

[Twiglett]

What?!!!! How did I miss this info? What are the extra costs associated with the lease? The whole 7.5 k are rolled into the price of the car at the lease.

Here is the link for you
http://www.teslamotorsclub.com/showthread.php/62429-Model-3-pre-order-and-tax-credit/page4

 

[tga]

Don't purchase it - get a lease initially with a plan to buy it once the lease expires.
As dgpcolorado mentioned in the other tax credit discussion, they roll the credit into the lease as a reduction of the downpayment.
The lease funds the depreciation and you get to buy the car at the end - assuming you still want it.

That works if the tax credit is applied as a down payment/cap cost reduction. Some of the Volt leases were structured whereby they artificially inflated the residual value by $7500. Anyone trying to buy at the end of the lease would have to pay way over market value, making it cheaper to give up your Volt and buy an equivalent used one. Yes, it doesn't make sense, but that's what the leasing companies did.

You need to really study the terms of the lease to figure out how the tax credit is worked in, and if it makes sense financially for you.

 

[Trips]

I am talking to my accountant next week but I calculated that a Single individual with no deductions would need to make a minimum of $47,000/year to get the full amount back. Now when you start adding in deductions it could be $55k+

The first deliveries are going to higher income individuals based on the car price, so they should qualify for the full amount. If you can only afford the $35,000 version I would not think that you will qualify for the full $7,500 based on your income.

 

[MP3Mike]

I sort of agree that it isn't "free money", however, if this isn't somewhat true then why do you express it as your car will be less $7,500 everywhere. If that is the case they should change it to, if applicable, and not advertise it like it's "free money".

It isn't "free" because you already earned the money through your job/investments/etc. It is just that the government is letting you use it to go towards a car instead of making you pay it to them. So the car does cost you less. (If you didn't buy the car you would have to pay that $7,500 to the federal government in taxes.)

 

[dgpcolorado]

The tax credit isn't free money, you have to have earned enough to cause you to owe at least that much in tax. (So you have actually earned the whole $7,500 if you get it.)

I might agree that if someone doesn't qualify for much of the tax credit that the car is likely too expensive for them. (But not always, there are cases where that wouldn't be the case.)

As you suggest with your last statement, it is possible to have a low income and high savings and investments; this is common among retirees. (The opposite can also be true: someone can have a high income but also high debt levels and little or no net worth. Income isn't everything.)

The strategy some of us used in the past to raise our incomes to qualify for the tax credit was to convert some of a taxable IRA to a Roth IRA. This is taxed as ordinary income in the year that one does the conversion. The downside of the strategy is that it can raise one's tax bracket, so that some of the tax credit is, in effect, "wasted" (because you could draw down the taxable IRA at a slower rate over many years in the future and remain in a low tax bracket). As of a few years ago a single person taking the standard deduction needed an income of about $55k to qualify for the whole $7500 tax credit. For a couple filing jointly the income needed was considerably higher.