IRA used EV, how?

[Bruce Jankowitz]

I have a 2019 KONA I leased a few years ago. I'm now looking to purchase the vehicle, from Hyundai but no dealers have any clue about this and what needs to be done to qualify for the IRA tax credit. They all seem to know about doing the lease purchse but that's it. not that there is a credit for used EVs.

I feel that as a lease holder I'm not the original owner. The holder of my lease(Hyundai Motor Finance) is the original owner and therfore I do qualify. I also meet all the other requirements like income, not claimed as a dependant etc. It's a lot of money and I don't want to leave it on the table.

Does anyone have any experience here that might help.

Regards,
Bruce

 

[Genevamech]

As a non-tax-expert person, I'm fairly sure you do not get any tax breaks when buying out a car you've already been leasing. For one, you got the tax credit when you originally signed the lease (or if you didn't you got screwed).

For two, in order for the transaction to quality you'd have to give the car back to the dealer and then buy it, because you only get the credit buying a qualified used vehicle from a dealer, which HMF is not.

Lastly, the way the law is worded, the clause is "original user" not "original owner." You are the original user, so you aren't qualified to get the used EV credit if you buy the same vehicle you've been using.

If it were any other way people would be double-dipping the tax credits left right and center. But again, I'm not a tax-expert person...

 

[Jim Matthews]

I feel that as a lease holder I'm not the original owner. The holder of my lease(Hyundai Motor Finance) is the original owner and therfore I do qualify.
Bruce

When I bought out my lease the Warranty listed me as the original owner. If your name is on the lease, you have the same standing.

FYI - If your original lease had cost cap reduction, you already received a tax rebate in the form of reduced payments.

 

[Bruce Jankowitz]

Thanks for the input, this is vexing.

I too am not a tax expert, that said from the IRS website(mentions owner, not user) and will check the lease documentation to see how it's worded. I'm looking to make a deal where I sell to the dealer and buy back from them

 

[Genevamech]

I'm looking to make a deal where I sell to the dealer and buy back from them

Good luck, sincerely! The dealer would have to buy the car from HMF first, then sell it to you. I'm willing to bet that the dealer will not sell it to you for the lease residual they paid to HMF... Why would they sell it at or near cost if they can sell it to someone else at a modest profit? I think the only way you can come out ahead is if you're upside-down on the vehicle by more than $4,000 (or you're really close friends with the dealer's manager and they're willing to sell you the vehicle at basically their cost)

And regardless of what the IRS website says, the actual text of the law says "original use" (Page 136 STAT. 1963) so I dunno. Seems to me like they worded it rather specifically.