reselling nearly new Leaf & $7500 Fed Tax Credit

There is a killer $10K incentive going on in Indiana that, when combined with the $7500 Federal Tax Credit and lower prices on '16 Leafs, have me interested.

However, being that I would only drive this thing about 4,500 miles/yr (17 mile round-trip commute), it seems like a "waste" to manufacture this huge beast and under-use it (e.g. if I only drive it 45,000 miles in 10 years). I'm doing this primarily for the environmental benefit... which is why I had been leaning towards a 3-4 y/o used Leaf.

One option is to buy it new, drive it for a short period (up to 1 year?) then re-sell, hopefully for about my out-of-pocket costs.

Thoughts?

https://www.nipsco.com/docs/default...sco-$10k-discount-flyer_(expires-3-31-17).pdf

It appears that the Fed Tax Credit reads "(3) The vehicle is acquired for use or lease by the taxpayer, and not for resale;" ... so if I purchase, pay tax, and register/insure in my name... it doesn't appear that there is a clear period of time for which I must own or drive it. However, it would be my daily driver and not sitting idle in my driveway looking to be sold.

https://www.irs.gov/irb/2009-48_IRB/ar09.html

Buying to sell is a sucker's move, one year or otherwise.
You will hand over the tax credit to next buyer in line, and pay accelerated depreciation and taxes for the privilege

Buy the car for a great price and use it for 10 years.

As long as your originally purchasing it for yourself and transferring it into your name you should be fine getting the credit, they just don't want dealers purchasing multiple vehicles/year getting the credit and then reselling the vehicle, possibly without even transferring the vehicle into their name. Whether you'll make anything doing this or even break even is another thing, but tax wise you should be OK. Also note to get the federal credit of $7500 must have at had at least $7500 of tax liability in the year your trying to claim the credit, not how much you paid or got back but your liability. Because of this I personally didn't get the full credit, you should probably check also and I don't know what if any stipulations your state has.

If you only want to hold the car for a short time, you should just lease it. The lease should already reflect the Federal tax credit. I don't know how Indiana's credit works, but in CA we have to apply for that one ourselves, but we can still get it with a lease. It could be the Indiana credit will also already be rolled into the lease also, or you may have to still apply for it (you'd have to look up the details).

In any case, this way you will be rid of the car after only three years, or if you really love it you still have the option to buy it out. Buying and then reselling is going to be a real hassle, and I suspect you'll come out significantly behind your purchase cost. It's not a good bet, in my opinion. Just look at the lease instead.

rollindurty said:

It appears that the Fed Tax Credit reads "(3) The vehicle is acquired for use or lease by the taxpayer, and not for resale;" ... so if I purchase, pay tax, and register/insure in my name... it doesn't appear that there is a clear period of time for which I must own or drive it. However, it would be my daily driver and not sitting idle in my driveway looking to be sold.]

Click to expand...

The subject of your post confuses me. It says "reselling nearly new Leaf & $7500 Fed Tax Credit" implying (to me anyway) that you are thinking you can sell the car after some period of time and sell with it the ability for the next owner to take the tax credit. If you think that, that is not true as is stated by rule 2 in the document you site. Only the original buyer can take the tax credit and note that person can only get the full $7500 if they owe in the tax year of purchase at least $7500 in income taxes. This fact is why the lease option is so popular on the car as Nissan USA owes enough each year to qualify for it all where most purchasers would not.

10k off of MSRP is a very good (but not great) deal right now but that deal is cut into a bit by making this purchase ineligible for the 0% financing otherwise offered. The flier you posted indicated: "NMAC special annual percentage rates (APRs) DO NOT apply." Even if you did not need to borrow the money, getting to use Nissan's money for 6 years interest free is still worth at least 2k, which is something else the person who buys it from you can't do. And even if you don't need to finance the purchase, I sure as heck would anyway and pay for gap insurance because if something were to happen to it while your "holding it" in that first year (like some texting driver hits you) you're likely to take a huge hit when their insurance company writes you a check for its current value which will be WAY less than you paid.

As other people have said here, there is likely no way you could win or even break even on a "turn around deal." But if I were eligible for this offer, I'd sure be looking around some Indy dealer lots - I'd love another chance to hold on to $7500 bucks otherwise given to Uncle Sam (or should I say Uncle Donald now) but I'd want the 0% finance offer too.

jpadc said:

10k off of MSRP is a very good (but not great) deal right now but that deal is cut into a bit by making this purchase ineligible for the 0% financing otherwise offered. The flier you posted indicated: "NMAC special annual percentage rates (APRs) DO NOT apply." Even if you did not need to borrow the money, getting to use Nissan's money for 6 years interest free is still worth at least 2k

Click to expand...

If the car starts out at 30k;
10k is taken off;
7.5k is paid on the loan from the tax credit proceeds,
Then $12.5k is borrowed for 6 years
At 3.5% APR that works out to $1376 in interest

And if you figure 3% inflation, the real (in today's money) interest cost is about 10% less, or about $1250
This is all assuming that the special Nissan rate is 0% APR for 6 years.

SageBrush said:

If the car starts out at 30k;
10k is taken off;
7.5k is paid on the loan from the tax credit proceeds,
Then $12.5k is borrowed for 6 years
At 3.5% APR that works out to $1376 in interest

And if you figure 3% inflation, the real (in today's money) interest cost is about 10% less, or about $1250

Click to expand...

Getting way off topic, but if I don't have to put the $7500 towards the no interest loan and instead put it in even my worst demand note bank account I get 2% over 6 years so thats ~$1k I earn in interest using Nissan's money instead of mine (so we are back at my +2k number). Besides there is no way I'd want to put that $7500 on the loan. The car depreciates by at least that much the second I buy it and if anything happens to it in the early years (when coincidentally each payment reflects proportionately more total interest than total principle) insurance won't pay more than the actual value. With gap insurance (a MUST when buying this car which is $500 from Nissan, more like $250 from others last time I checked) at least they will pay off the entire balance on loan. If my $7500 is already paid on the car, that is money I just loose. Just ask this guy: http://www.mynissanleaf.com/viewtopic.php?f=27&t=23452 You take a huge risk buying down the loan on a depreciating asset like the LEAF so likely your loan amount should be more like ~20k (I think new car rates are currently lower than your 3.5% estimate but that I have not checked).

Bottom line is that 0% deal on a car that tanks in value from day one thanks to that government subsidy is not something to sneeze at.