Need help understanding Federal & CA Tax Credits for buying a Nissan Leaf

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I am buying a Nissan Leaf next week. There is a $7500 Federal Tax credit & a $2500 CA Rebate from what I have read.

From what I best understand, you apply for the CA rebate with proof of purchase & they will eventually send you a check. Please correct me if I am wrong or if it has to be done differently.

The Federal Tax Credit is the confusing part. How does that work. Does the Federal Govt at the end of the year give me a check for $7500 or is it a deduction against my income ? According to the Leaf website, I can LEASE the Leaf & I get the $7500 instantly. I considered doing that to get the $7500 instantly & then re-financing the Leaf in 2-3 months but every Nissan lease has a $595 Acquisition fee.

If anyone knows for sure & can guide me well, please do share your input. Please spare me the free advise to not buying an electric car or off topic inputs.

Here is a link to the Leaf website with Rebate info : http://www.nissanusa.com/leaf-electric-car/index?dealer_code=393...

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Tax credit from IRS.


http://www.irs.gov/newsroom/article/0,,id=206875,00.html

Plug-in Electric Drive Vehicle Credit (Section 1141): The new law modifies the credit for qualified plug-in electric drive vehicles purchased after Dec. 31, 2009. To qualify, vehicles must be newly purchased, have four or more wheels, have a gross vehicle weight rating of less than 14,000 pounds, and draw propulsion using a battery with at least four kilowatt hours that can be recharged from an external source of electricity. The minimum amount of the credit for qualified plug-in electric drive vehicles is $2,500 and the credit tops out at $7,500, depending on the battery capacity. The full amount of the credit will be reduced with respect to a manufacturer's vehicles after the manufacturer has sold at least 200,000 vehicles

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http://nissanleafelectric.com/2010/04/how-do-the-nissan-leaf-tax...
Nissan Leaf News
Updating the San Francisco Bay Area with the most recent news on the Nissan Leaf
Apr 15 2010
How Do the Nissan Leaf Tax Credits Work?
So you’ve heard the buzz all around the internet. While the Leaf has an MSRP of $32,780, there are a few unanswered questions. Many autoblogs and even Nissan are stating that the tax credits will be $7,500 Federal and up to $5,000 in California, so the car only costs $20,280! That sounds great, as with a smaller down payment the car will cost only $400 a month to finance! Well, not exactly…

To be specific, the tax credit goes to you, and comes back around tax time. So, if you purchase your Leaf when it launches in December of 2010, you’ll have to be on the lookout for your rebate in April 2011 along with the rest of your tax return. Also, using San Mateo County in California as an example, with the extra $5,000 credit for a total of $12,500 in “savings:”

MSRP is: $32,780
San Mateo County Sales Tax: $3,037.24
DMV Fees: 455.75
Typical California Document Fee: $55
Total “out the door price:” $36,327.99

60 Month financing with 10% down, and assuming a 7% rate = $655.06

But wait! I read online that there is $12,500 in rebates! Again, those come into play in April when you get your refund. So, when you read online that the rebates price a Leaf in “The low twenty thousand dollar range,” remember that there is a little delay on that money (it is the government after all), and when you finance, you’ll start the loan for the full amount.

Some people have “run the numbers” themselves and pointed out that with $12,500 in rebates, the payment should only be $407.31. Assuming you were given the rebates at the time of the loan, this would be true. Since you have to wait for the rebate, it’s not.

So what do you do with the rebate? In California, there are no pre-payment penalties with car loans, so you can just pay down the principal amount of your loan. The monthly payment will stay the same, but you’ll knock the loan principal down by about a third. You can also refinance the loan, and use the $12,500 as a down payment on the new loan. Doing it this way will knock the monthly payment down a few hundred dollars a month.

Finally, there has been a lot of chatter about a tax credit to help the cost of the 220V charging station your house should have. Officially, it’s a tax credit that covers half of the cost of installation, up to $2,000 in participation. The typical installation has been estimated at $2,200, so expect the government to split that with you, and cough up $1,100 at tax time in April.

While there is a lot of money coming back, be prepared financially to be out of pocket till you file your taxes and obtain your refund. While I’ve seen the information spun into a really pretty picture, like the old saying goes, if it’s too good to be true, it probably is.

In layman terms....Do I get a check back from Feds for $7500 or is it deducted against your income ?

tragedytotriumph said:   In layman terms....Do I get a check back from Feds for $7500 or is it deducted against your income ?

I don't know but typically a tax credit is a reduction against your taxes (not income). So, you do your tax return and you owe say $10,000 in taxes. There will be a line on the form reducing your taxes by $7500 so you only owe $2500 in taxes. Most people pay taxes throughout the year though so you probably paid say $10,000 during the year. In that case you get a refund check.

If you don't pay at least $7500 in taxes to the Feds for that tax year then I'm not sure you get the full $7500. Some tax credits only work when you owe at least that much in taxes. Do you pay $7500 in Federal taxes each year?

I was confused about this with the homebuyer's credit too. Everyone kept saying it was just a credit -- I thought to myself that this might take years to burn off unless I basically stop paying federal income tax on my wages. I did my taxes that year, and they actually sent me a check for the entire amount of the credit. It really makes more sense that way. If you owed $5000 in taxes, I think they would send you a check for $2500. If they paid you $500 that year, you get your $500 and a check for $7500. That is MY understanding of it after receiving my homeowner credit. I am not a tax consultant though, take my advice for what it's worth.

I think the California credit may already gone for the 2010-2011 fiscal year. In other words, if you buy a Leaf right now, you won't get any CA tax credit at all. See here: https://energycenter.org/index.php/incentive-programs/clean-vehicle-rebate-project/cvrp-program-status

It appears that more money may be added for the 2011-2012 fiscal year, but with the current budget mess in CA, who's to say.

That said, the Leaf is surprisingly awesome. I see them all over the place. I drove one at the SF auto show last year and aside from the freakish quietness and no exhaust, its just like a regular car.

I mean no disrespect or to thread crap, but I would highly advise against getting a Nissan Leaf. The Leaf is ranged for 100 miles per charge and there is no backup gas generator to propel this vehicle. I.E. once you run out of battery, you are SOL. I suggest checking out the Chevy Volt. Absolutely gorgeous car (It's nicer inside than my Lexus) has an electric engine with a shorter range than the Leaf, but has a gas generator backup (NOT a gas engine.. it's the same as the generator in a house, etc). It runs on 100% electric propulsion, so even after the gas generator kicks in you won't notice a change as it's always electricity powering the tires. Oh and the same $10,000 incentive applies to the Volt.

green14 said:   I mean no disrespect or to thread crap, but I would highly advise against getting a Nissan Leaf. The Leaf is ranged for 100 miles per charge and there is no backup gas generator to propel this vehicle. I.E. once you run out of battery, you are SOL. I suggest checking out the Chevy Volt. Absolutely gorgeous car (It's nicer inside than my Lexus) has an electric engine with a shorter range than the Leaf, but has a gas generator backup (NOT a gas engine.. it's the same as the generator in a house, etc). It runs on 100% electric propulsion, so even after the gas generator kicks in you won't notice a change as it's always electricity powering the tires. Oh and the same $10,000 incentive applies to the Volt.

price is $41K though

jigsaw1975 said:   green14 said:   I mean no disrespect or to thread crap, but I would highly advise against getting a Nissan Leaf. The Leaf is ranged for 100 miles per charge and there is no backup gas generator to propel this vehicle. I.E. once you run out of battery, you are SOL. I suggest checking out the Chevy Volt. Absolutely gorgeous car (It's nicer inside than my Lexus) has an electric engine with a shorter range than the Leaf, but has a gas generator backup (NOT a gas engine.. it's the same as the generator in a house, etc). It runs on 100% electric propulsion, so even after the gas generator kicks in you won't notice a change as it's always electricity powering the tires. Oh and the same $10,000 incentive applies to the Volt.

price is $41K though


I think the Leaf is best in two car families. Use it for commuting/short trips. Use the other vehicle for long trips. No need for the Volt this way.

EDIT: Or if you almost never make long trips, just rent a car.

This is exactly what I am trying to avoid. Leaf vs Volt & not buying electric car. Nobody knows my situation & my benefits. With or without the tax credits, I am getting one. I am just trying to understand how they work.

After speaking to a tax consultant from H&R, he advised me the same thing my dealer did, lease it & get the $7500 upfront & refinance it in 2-3 months. You loose the $595 acquisition fee or just ride out the Lease term & buy it at the end.




green14 said:   I mean no disrespect or to thread crap, but I would highly advise against getting a Nissan Leaf. The Leaf is ranged for 100 miles per charge and there is no backup gas generator to propel this vehicle. I.E. once you run out of battery, you are SOL. I suggest checking out the Chevy Volt. Absolutely gorgeous car (It's nicer inside than my Lexus) has an electric engine with a shorter range than the Leaf, but has a gas generator backup (NOT a gas engine.. it's the same as the generator in a house, etc). It runs on 100% electric propulsion, so even after the gas generator kicks in you won't notice a change as it's always electricity powering the tires. Oh and the same $10,000 incentive applies to the Volt.

Can you actually come out ahead or break even if u leased? Total lease cost is around $13K. With the 2 credits you state, it almost looks like your lease could be free (minus taxes)

Honestly, saying "omg have you spent 60 seconds researching the Leaf FUD FUD FUD!!" is kind of insulting.

green14 said:   I mean no disrespect or to thread crap, but I would highly advise against getting a Nissan Leaf. The Leaf is ranged for 100 miles per charge and there is no backup gas generator to propel this vehicle. I.E. once you run out of battery, you are SOL. I suggest checking out the Chevy Volt. Absolutely gorgeous car (It's nicer inside than my Lexus) has an electric engine with a shorter range than the Leaf, but has a gas generator backup (NOT a gas engine.. it's the same as the generator in a house, etc). It runs on 100% electric propulsion, so even after the gas generator kicks in you won't notice a change as it's always electricity powering the tires. Oh and the same $10,000 incentive applies to the Volt.



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