Wait until 1 Jan to buy your 2006 Hybrid

No, I didn't get that detailed with them. I am sure that Honda will CONTINUE to have the forms necessary to get the tax CREDIT on their website once they become available.

if you bought a 2005 hybrid in 2005 and will file for the $2000 dedution on your 2005 taxes, can you buy a 2006 model in 2006 and file for the credit on your 2006 taxes?

If you want to read the bill, here is the link: http://www.ne.doe.gov/EPAct2005/hr6_textconfrept.pdf

You will need adobe reader to see it. You may also have to right click on the link and click on "save target as..." then open it.

Section 7 (page 682) describes vehicles.

Hi Donna-

Check out the link to this site
http://hybridcars.about.com/od/news/a/hybridtaxcredit.htm
It has the most concise and clear explanation of the hybrid car tax credit I've seen. The new energy bill is convoluted and very complex (Gee, why would the government do that ? :) but I think it will be worth the extra math and paperwork to get the credit.

We've already go a Ford HEV and are waiting until Jan. 2006 to get my husband his long-awaited Prius-just to get this credit.

Good luck,

I GOTTA TELL ALL OF YOU....I'M SHOCKED by the folks that are more worried about a tax credit ....I thought us HEV folks are looking to reduce oil consumption not our own expenses....I guess it reall is not about efficiency!

Fully Agree Joan !!

Personally, my interest in buying a hybrid was motivated by the environmental issues. Once I began to research I discovered the government (Fed's and state) was giving some rebates to help offset the additional cost of a hybrid power plant.

Lets see... take deleivery on 12/23 and get $2000 tax deduction ($about 600 credit) or wait 2 weeks, take deleivery on 1/2/06 and get a $ 2100 credit.... Hummmm What shall I do ???

Holy Smoley... Thanks for the links. Now all I have to do is get my car dealer to understand it. I ordered my 2006 Hybrid, so I could take possession in January, ( YES YES YES, so I could get the full benefit of the tax credit. The government doesnt often give you anything you know!) and now he tells me that since I ordered it in 2005, it doesn't affect my tax situation... WHAT? THEN WHAT THE HECK IS THE PURPOSE OF WAITING!????
geeeZE... i THINK he's wrong... and he better HOPE he's wrong, or he'll be doing the paperwork over or lose a sale! :( I could be bitter about this. :)

Donna, Don't worry about not getting the tax credit. Per the energy bill passed by congress "...the new qualified hybrid motor vehicle credit determined under this subsection for the taxable year is the credit amount determined under paragraph (2) with respect to a new qualified hybrid motor vehicle placed in service by the taxpayer during the taxable year'.

'Placed in service' is not when you made a deposit on it. It's when you drive it off the dealer's lot.

This works by quarters. If Toyota, for example, has sold 60,000 hybrids in the first quarter of 2006, then all those people in that quarter get the full tax credit for whatever vehicle they purchased. Even if 70,000 are sold, they all get that credit. In the quarter immediately following the quarter in which 60,000 is reached, vehicles sold in the following quarter also qualify for the full credit. So, to review, if 60k hybrid Civics, Accords and Insights are sold in the first quarter of 2006, then people buying those vehicles in the first and second quarters of 2006 will get the full credit available. After that, the amount of the credit gets reduced for two quarters, by 50% and 25%, until it is gone. So, for the full year of 2006, you are guaranteed at least SOME sort of credit. An, I highly doubt that any company will be able to move 60,000 in one quarter. Toyota could conceivably do it in two. I highly doubt Honda could do it in less than one year. Though this credit is more than the deduction (the $2000 deduction would only affect your actual tax due by $400-800), it is for a limited time, which will artificially drive up the demand for hybrids so that people can get the tax credit, which might drive up price, which would then negate any benefit from the credit. If you pay attention, this bill actually benenfits the American companies more, as this credit will be available for Ford, Chevy, Saturn and others long after this dries up for Honda and Toyota.

Just as a guess how many months do you think the credit will last for each automaker?

Considering the pace that which they are selling it hard to tell. Toyota could end in as little as 3 months. Here is an article from MSNBC that talks about the pace hybrids are selling:
http://www.msnbc.msn.com/id/7622450

I've been using this document. The tax credit information your looking starts on page 1391. The hybrid portion starts on page 1401.

All it says is put into service during the tax year.

Good Luck

http://www.ne.doe.gov/EPAct2005/hr6_textconfrept.pdf

What if I need a vehicle now? We are in the queue to receive a 2006 Honda Civic Hybrid this month. Can we still get the deduction? IRS doesn't list 2005 vehicles for the 2005 tax deduction. Has anyone else tried this?

Don't see that anyone has mentioned this before, but beware that if you end up paying alternative minimum tax (AMT) in 2006 you will get nothing. AMT does not allow for tax credits of this nature. And it's kind of hard to determine whether you will meet criteria for AMT or not, although likelihood is higher with increased income and lots of deductions. For some people may be safer to take the tax deduction in 2005 than gamble on the 2006 tax credit.

When I spoke to the IRS, they said the vehicle must either be purchased/taken delivery 1 Jan 06 or later to get the tax credit. That means that if you are the first owner of the vehicle (05 or 06) then you are entitled to take the credit. If you get the 06 before the end of the year, you only get the tax deduction.

Thanks for your ideas. Some folks on this discussion have mentioned waiting to "take delivery" on a new Prius until Jan 1st; have other people been able to convince dealers to hold off on delivery of their special-ordered car until the new year? My dealer doesn't seem at all interested in that idea.

The real difference between delivery in 2005 and 2006 is not going to be what the initial hype might lead one to think. In the real world, it will be close to a wash for most people. Here is why (you can skip to the last paragraph for the bottom line on this issue).

Most preliminary calculations of the 2006 tax benefit range from $2,750 to $3,150. The new tax credit has to be calculated using multiple variables, and is going to be much more complicated than the current deduction, as is the process one will likely have to go through to actually get it (and I do not have a very high degree of trust that the 2006 credit will remain solid). For 2005, one can be certain of the amount of the current deduction, and of the fact that one can actually claim it right on the tax return filed next April 15. At a combined federal/state tax bite of only 30%, one would net $600 between the federal and state benefits (in most states) of the current $2,000 deduction. If there were only the tax benefit to compare, then, yes, 2006 would definitely be better (at least for the first 60,000 buyers). However, the sticker prices on the 2006 Prius are going to be significantly higher than those on the 2005, and these actual costs will wipe out all or most of the potential tax gain.

The base price of the Prius for 2006 goes up another $450 (it has already gone up $300 recently), to $21,725. Toyota's freight charge included in the MSRP (shipping and handling) also goes up by $40 to $580. The option packages being shipped will also be higher in price. In each area of the country, dealers receive virtually all of their Prius units in a fixed number of option packages. For example, the Central Atlantic States currently receive three packages (codes AG, AM and BC). For simplicity, I will call them packages A, B and C. For the 2006 model, these will compare to HE, HK and NL (with a fourth package, NW, adding leather). Again, for simplicity, I will call them A, B, and C (and C-with-leather). There is a very close parallel between the 2005 and 2006 packages (a rear camera and MP3 capability being added in 2006), with the B packages having all of the safety options. In 2006, initial shipments will be 15% A, 52% B, 25% C (and 8% C-with-leather).

Since the majority of units will have option package B, let's look at the actual sticker price of a 2005 "B" Prius and a 2006 "B" Prius. The 2005 has a $21,275 base, plus $2,075 option package, plus $540 freight, for a total of $23,890. The 2006 has a $21,725 base, plus $3,830 option package, plus $580 freight, for a total of $26,135. This is an increase in actual MSRP of $2,545 on the cars that the majority of buyers will actually be able to purchase. This is before any accessories (like floormats) are added, and you can bet those items are not going down in price!

To summarize, I can get a "B" Prius in 2005 for $23,890 and save $600 from tax benefits, for a net of $23,290. In 2006, I can get a “B” Prius for $26,135 and (potentially) save up to $2,750-$3,150 from tax benefits, for a net of $23,385-$22,985. Delivery in 2006 could range from costing an additional $95 to saving $305. From a financial standpoint, waiting until 2006 because of the tax law changes isn’t going to be a big deal for the majority of buyers.

Paid a "non refundable" $500.00 to a Conyers (near Atlanta) Honda dealership on October 10, 2005 for a new 2006 Opal Blue / tan Honda Civic. Well, it's November 13th now and the dealer is only able to say that the car was "released" on October 19th.

Do any of you know what "released" means? The Hybrid Civic is built only in Japan - right ? - so "released" could mean - what... February or March of 2006 ?

Thanks.
Bill Trail
Macon, Georgia

...as a follow-on question: If the HCH is only built in Japan then won't we on the east coast (Atlanta/Conyers) be the LAST to see a 2006 Honda Civic Hybrid?

thx again
bt

Do you happen to know if I can purchase the hyrid under my Company and still get the deduction? Also, must it be a purchase or could I just lease it?

Bonnie, From what I understand, when you complete the paperwork, you then take deleivery. There is no reason to do the paperwork until your ready to take delivery, so I would say wait and do the paperwork when you take deleivery in January

Martin: You must purchase, not lease, and, yes, it can go in the name of your business.

Here are some eligibility details as detailed in a government website at www.fueleconomy.gov/feg/tax_hybrid.shtml

· You must purchase the vehicle new and for your own use, not for resale.
· You must drive it mostly in the United States.
· The vehicle must meet all federal and state emissions requirements.
· Government agencies, tax exempt organizations, and foreign entities are not eligible.

Other requirements may also apply. If any of these conditions change within 3 years of purchase, you may have to return some of the money saved by the deduction.

Unless the vehicle is purchased solely for business use, simply include the deduction on your 2004 1040 tax form in the "Tax, Credits, and Payments" section. Enter the amount of the deduction and the words "Clean Fuel" on the line next to line 35 and include the deduction in the total.

If you purchased the vehicle solely for business use, just claim the deduction on the "Other expenses" line of either Schedule C or Schedule F.

Hello-

Our Ford Dealer in Madison, WI was very amenable to tucking our Escape away for us until January 2, 2006. Maybe it helped to walk in, ask to sit down with him and speak with him face to face with documentation of the energy bill in hand or maybe he's just a nice guy and would have agreed to it over the phone. I've often found, however, that's it's easier to say no over the phone that to someone's face. He also agreed to not use it for test drives.

I don't know if others found this to be true, but our sweet-natured salesman was ignorant of the energy bill and of hybrids in general. He was grateful to have the info to help with future sales.

RE: The dealer which told you the OLD TAX DEDUCTION depends on the model year and not the calendar or tax year in which the vehicle is placed into sevice.

SHAME ON THAT DEALER!

The tax deduction is definitely based on the year in which the vehicle is placed into service. The model year is important only to the extent that each model must be certified that it meets the requirements for the deduction before the deduction can be claimed. The link below will get you a copy of both the Toyota and IRS certifications for the Prius. Since the 2006 model is not yet here, the certification letters are not yet available.

http://www.toyota.com/prius/tax.html

I have a deposit on a hybrid highlander, N grade base model, no package, floor mats only, V 6.
I will buy and put into service this SUV after January 1, 2006.

(see below my previous tax benefit claims)....If I buy it with my money as a gift for my adult daughter, am I eligible to take the deduction on my taxes if the title is in her name at point of purchase?
I do not want the title in my name. I want to take the deduction allowed under the Energy Bill if possible but would not worry too much if my daughter had to take it on her and her husband's tax return.

My husband and I previously bought a Prius (2006 calendar year) and a Lexus 400h Hybrid (calendar year 2005) and we use these two cars. we took the tax reduction benefit for these cars (still to do on the 2005 purchase of Lexus).

My daughter and her husband bought a Lexus 400h (hybrid) and want another hybrid. They will take the tax benefits on one or both if necessary.

My concern is to properly document the purchase in terms of title and who is the actual Buyer (pays for it).

thank you

Although this place can be a good place for advice, I would recommend you talk to a tax accountant or an IRS rep. They are more likely to provide you with good quality answers.

Way to go Savy... You inspire me. Where there is a will theres a way. I'm having a hard time locating white limited w/ grey interior. Has anyone seen one? I'm not to crazy about the ivory interior... Carl

I've driven my new 6HCH about 7,000 miles now - pretty much all work-related highway miles.

Just achieved best mpg of 70.6 on a 400-mile non-stop one-way trip Monday, January 9, 2006.

I did this - despite those of you who think I'm full of it - by driving 58 miles an hour WITH the cruise control engaged. No kidding. I even had to turn on the emergency flashers out on the long freeway trip to keep from being run over... Now THAT'S a problem I'd like to see Honda figure out !!! : )

Those of you complaining about 30 or 35 MPG are probably driving your 6HCH's like Acura TL's and mashing the gas pedal. You're gonna have to adopt a new style of driving if you want to see some really fabulous MPG numbers... and short in-town trips with a cold motor and a heavy foot are the exact opposite perscription from what the hybrid doctor ordered.

Drive it like a priest in a funeral - what I like to call my PIF driving style - and you'll see some great MPG's too.

Let me know what you think... here's my name, email addess, web page as well as a new blog I just started about the Civic.

Remember - fabulous mileage, FANTASTIC resale value, car of the year awards left and right, and a pretty good looking little car to boot. What could be better. OH - virtually NO pollution ?

COOL.

Bill Trail, Owner & President,
Penny Customer Software, Inc.
657 River North Blvd.
Macon, GA 31211

http://www.billtrail2006civichybrid.blogspot.com/
http://www.pennyfinance.com/

Well the Toyota Prius in Houston is available on lots here in Houston. No need for anyone to pay for a spot in line on a list. And 2500?? geez. Scummy!