I’m trying to understand if there is a minimum time requirement for owning a PHEV that is eligible for the tax credit. In the past year I have cycled through the vehicles that are relatively easy to get but have a higher resale value on the used market. I had one of the crazy Tundra leases that I shifted in May of 2021 and then had an ordered Wrangler Rubicon, 2 Tahoes and a now a RAM 2500. I usually keep 3-4 months and put 6-8k miles on them. I have been making about 5-7k each.
My wife is interested in a BMW PHEV to replace her aging X5 Diesel (I love that car) and trying to see if I can keep the train going until this house of cards comes tumbling down and then will focus on driving what we actually want.
The day you buy it, you are eligible to claim it in that tax year, as long as you have enough tax liability up to the max (eg $7500 on the X5e). Consider this and timing if you plan to claim it 1 or more times in the same year:
Fueleconomy.gov is the authority on how much each of a Federal tax credit each PHEV is eligible for
The official rule is that you if you buy it for reslae purposes you aren’t eligible for the tax credit.
Defining that and enforcing it is very gray.
If you keep it for a few month it will be hard to prove it was for resale purposes. But if you load up and claim a bunch of credits in a single year, you may get flagged for an audit. Theres no telling what they’ll decide if they do audit you.
Thanks. That is what I was thinking but wasn’t sure and looking through the tax code I could t get a great feel. I think this ties similarly to people that buy cars for their resale…just now it’s a little higher vs the traditional of not losing much. Assuming the sedans aren’t a good vehicle to try it with and the X5e is probably the one to try with (albeit harder to find).
To find eligible PHEVs on the ground? They are probably a better candidate. My spot checks on the west coast show more 530e than X5e, but also more XC90 T8 than X5e (which also gets you 179/Bonus depreciation on a business purchase). The small/mid SUV PHEVs are all in very short supply.
I ran the numbers on all PHEVs. I was interested in luxury brands. My calculations X5e comes cheaper than Volvo XC60 PHEV (cuz of various rebates but obviously check you are eligible for)
It’s not a bad thing to me. It’s one of those things that it doesn’t matter what I think. What matters is how others think ( residual value in 3 years)
I will be picking up my 4th (since 11/2020) X5 45e on Monday and also have my 2nd 330e (since 9/2021) that I picked up in March. I posted about the PHEV purchase flips on various topics but in my case it is the best value in the market and we get to drive some really nice cars as a bonus (not hating but it would suck if I couldn’t flip and had to drive a Frontier or a Leaf). Check out some of my recent posts, definitely recommend taking the PHEV route…
It really depends on the market conditions at the time but my BMW dealer ends up appraising my trade-ins somewhere between 95% to 90% of the original MSRP.
