Could it be as simple as just buying it out from the Leasing company ( I assume they quallify as a dealer as they do this all the time) at the original Residual value?
If not then ask your dealer how they acquire it and if you are willing to trust that they are going to sell it to you at the price they acquire it for. either way as long as “the dealer” gives you the and the IRS the document.
The sale qualifies only if:
You buy the vehicle from a dealer
For qualified used EVs, the dealer reports required information to you at the time of sale and to the IRS.
A dealer is a person licensed to sell motor vehicles in a state, the District of Columbia, the Commonwealth of Puerto Rico, any other territory or possession of the United States, an Indian tribal government, or any Alaska Native Corporation.
Required information includes:
Dealer’s name and taxpayer ID number
Buyer’s name and taxpayer ID number
Sale date and sale price
Maximum credit allowable under IRC 25E
Vehicle identification number (VIN), unless the vehicle is not assigned one
If you read the IRA, or even the IRS bulletin, the answer is no. It has to be at least 2 years old, it has to transact through a dealer, you can’t be the first person to put the vehicle in service.
Seems you’re not reading fully. The car is going off lease, 3 years old. Transaction takes place through dealer who will title in name of spouse, who is not the original owner (which was leasing company and not the The answer is not NO. The ultimate hack so don’t rain on us hackers. Per IRS:
Be an individual who bought the vehicle for use and not for resale
Not be the original owner
Not be claimed as a dependent on another person’s tax return
Not have claimed another used clean vehicle credit in the 3 years before the purchase date
As long you don’t have the same last name, don’t/never once filed jointly (linking your IRS master files), don’t share an address (linking your Lexis-Nexus), and one of you doesn’t live in a state with common property.
Feel free to let us know how it goes for you when you file in 2024.
The IRS is encouraging us to recycle the EV! Your double negatives @mllcb42 make it hard to understand your meaning. Granted, the language the IRS used is not optimal and will certainly change. But law is all about the language, not your individual interpretation of what they may mean. For now, KACHING!
But here, it was the captive/bank who first placed it into service as part of its leasing business. The term placed in service is a common term in the tax code, and generally means the time when the taxpayer starts using the asset in its business.
This is where it becomes an interesting legal question and why it isnt as cut and dry. They specifically don’t day ownership, where other parts of the law does. So why word it so differently if they mean the same thing?
Note that the used ev tax credit is discussing a personal tax credit, not a business tax credit, so using the business definition of when it is used as an asset in a business gets to be more debatable.
Who is the first party on the leasing contract? Who has FROR to buy it for the residual value? If not for the leasing company putting it into service on behalf of the first party, would it be in service? Whose name is on the registration?
Yes your reading of the Law is correct.
Limbo already told us,
“Now time to return leased Bolt. But if I buy her, another $4K in federal rebate as new owner.”
So I assumed it was already a model year '21 or before unless I missed where 18 mo leases were happening on a regular basis prior to July of '21.
And yes a “dealer” has to do the paperwork. I am not sure if the lease company is a dealer in his state but since they sell their acquired Motor vehicles all the time I would assume so. It is up to the lease company to decide if they are a “dealer”
and on the third point Leasing company is original owner of vehicle their name is on the title Limbo just had the pleasure of driving it for the last 3 yrs.
as long as the dealer gives him and the IRS the document that he purchased a used Bolt he should qualify for the up to $4,000 Tax credit.
Will the used EV credit apply to lease buy outs? I was originally thinking NO. But …
Wow, the IRS just defined Original use as "Q8. What does “original use” mean? (updated February 3, 2023)
A8. For purposes of the new clean vehicle credit, “original use” means the first use to which the vehicle is put after it is sold, registered or titled. A vehicle is not a new clean vehicle if (1) another person (including a dealer) has ever purchased, registered or titled the clean vehicle and (2) placed it in service for any purpose (including as a dealer demonstrator vehicle). Where a vehicle is acquired for lease to another person, the LESSOR is the original user.
What that means for the Used EV credit is the LESSOR (definition" a person who leases or lets a property to another; a landlord “lessors and their solicitors discussed tactics for dealing with the lessees” is the Leasing company you leased from.
So, my opinion is a Used vehicle credit will apply to a lease buyout at the end of the lease from a dealer. Holy smokes this is great news for folks. A LESSEE, is the driver who makes the payment.
I was shocked as I thought I was out of this Credit. I bought out my Lease last night from a Hyundai dealer rather than Leasing/Finance company (no fees or extra cost) just in case… And found this today. I hope it sticks. Only the tax lawyers and accountants will really know in early 2023… Fingers crossed.
curious how the selling price would be calculated here. Is it just the buyout amount? Surely not, otherwise people can set the buyout amount to whatever they want by just making payments before the lease ends and then every EV under the sun would qualify.
The argument here seems to be that the IRS clearly defined who they consider the original user to be in the new evs section.
For a used EV, that would continue that the orginal use was the business (the lessor) that placed the vehicle in service for a business purpose (leasing it to the consumer).
All the counter arguments to the used credit applying on a buy out has been that the credit didn’t specify the original owner, which would without a doubt be the lessor, but rather the “one who put it into use”. This change would make it seem that they consider the lessor as the one who put it into use.
For it not to apply, one would have to claim that they use a different definition of original user for each section, without any evidence to suggest that’s true. Without this clarification in the new ev section, there was a good argument that they specifically didn’t say “original owner” for a reason.
