For a purchase, you will need to file the taxes at the end of the year. For the year 2023, it is a tax credit, from 2024 it is no longer a tax credit but a rebate. The cars that qualify for this are limited with battery and manufacturing requirements kicking in from April 18th.
For a lease, the car company gets a tax credit. All EVs qualify for this. Some of the car companies are willing to pass it through to the customers but often with inflated MF and lowered RV. Often this makes a limited difference to the monthly payments. Hence some people lease the car and buy it out immediately so they get some pass-through credit. Different from each car so would have to do your calculations.
This is helpful. Thank you. It’s weird bc Mercedes is telling me I have to talk to a tax person for a lease when clearly lots of other have had it “passed through” as an incentive (EQS posts)
Based on what I understand, every make should have enough tax liability to claim the credits. This must be true with US operations too. From some of the data, Tesla doesn’t pay any federal tax, that means they are not able to get these credits. Same could be true for some makes who might just keep their US Federal tax zero while paying tax elsewhere by moving numbers.
Moreover, other makes are able to pass on the credits probably because EVs are still smaller in quantity and they are anyway having profits through their ICE sales, thus having tax liability. So, in longer term, when EVs go up in quantity, these programs may not be sustainable. Even if Tesla was eligible, I am not sure if they have enough tax liability to cover their large number of EV sales.
I guess these makes will have to find a banking partner who can support these leases.
Your MB dealer can’t give out tax info as they are not CPA/accountants.
What they are telling you is that each deal is unique - you may be able to write off the lease if you have a business. - ask your tax person.
But as others have said - MBFS gets the tax credit on a LEASE. It’s up to the bank to credit you back.
You do NOT get to write off the $7500 on your taxes.
What you need to focus on is the cap cost reduction (lease credit pass thru) and see what they are offering as a net cap cost reduction.
Make sure you know your base MF because that is how dealers will swipe the money back from you.
Now, a jacked MF can still be OK, as long as the discount is there to accommodate. In many cases, a jacked MF with associated sales price discount is actually preferable.
@Ruchir_Godura I am still in the market. Volvo is not making the lease attractive even with the $7500 rebate. That’s because the residual for 36 month leases are at 50% and the money factors start at the equivalent of 5% can go as high as 9%. I have gotten quotes from several dealer and have not found one that makes the lease with the $7500 rebate cheaper than buying the car at MSRP
@pagep
I’ve been doing a lot of research on this as well and if you’re looking to do an immediate buyout, then the residual value doesn’t really matter and neither does the MF make much of a difference.
Basically you just need to compare the leased priced of the car vs the purchased price.
When leasing, you get $7500 off but you pay $995 in acquisition fee, $450 in buyout fee and perhaps $400 in ‘dealer fee’, so you should still get a net benefit of $5655 as opposed to buying outright. You probably need to pay DMV fees twice (first time at lease start and second time when you buyout). In addition, you can include the first month’s rent cost… all in all, you should net out at least $5200 as compared to buying.
I’m evaluating this option as well… .so happy to exchange notes on details
@Ruchir_Godura If you find a lease that does that, then please let me know. In theory what you laid out makes sense, but what I have uncovered is that the leasing structure at one pay still has a money factor and residual, which is why the structure you laid out is not available. But if you find such a structure, please reach out to me immediately and let me know where. Thanks so much.
If you plan to buy-out the vehicle in any event, the residual value doesn’t really matter if the MF is more or less than comparable to what you receive financing the car outright.
