This has probably been answered on this forum before, but I couldn't find info via search.

How long do I have to keep my FEH to keep the tax credit? One year? 18 months?

Also, after that minimum period, can I buy another hybrid and get another credit? Just wondering if it is a "once in a lifetime" type of thing.

I love my FEH, but should have gotten the 4wd version. When the new '08 comes out I'll probably go for it if my "minimum" time has passed to get the credit.

Thanks in advance.

 

From my understanding, the IRS has not yet stated the time a buyer has to "hold" onto their hybrid for which they received the credit. I do know the credit is not a 1 time deal. You can get as many credits as qualified hybrids you buy as long as you arent buying to resale, etc.

 

There is definitely a time period you have to keep it or else you have to pay back a pro-rated amount of the tax incentive(s). I don't remember what it is... I didn't pay too much attention to it since I plan to keep mine for a long time.

 

I believe I read it in the Turbotax software that if you sell it before owning it two years you have to pay back a pro-rated amount. I will see if I can find it and copy/paste the info.

Edit: I found the reference but it won't let me copy it. It looks like it is covered in IRS Pub 535 Chapter 12. It also looks like the recapture period is 3 years. That was for vehicles covered under the deduction that applied to vehicles purchased in 2005. I'm sure a search of the IRS website would reveal what applies to those subject to the credit.

Hope this helps.

 

Ch 12 mentions a total credit limit of $100,000. I guess that is 50 FEH/MMH"s???

 

Here is the IRS information page about the hybrid vehicle credit. Many of the instructions for Tax Year 2005 referred to the older tax deduction (from your income) for hybrids or clean vehicles. This is a credit (from your tax owed), so if you have a 4WD FEH or MMH, your are basically guaranteed a $1,950 reduction in your taxes (the amount the FEH and MMH qualified for). As far as I know, there is no minimum ownership (just need to purchase the vehicle for your own personal use after January 1, 2006) or requirement to pay the credit back if you sell, though I would presume that you couldn't buy it one day and sell it the next, and then claim the credit. I'm sure when the IRS puts out instructions for the 2006 tax year, there will be more detailed instructions.

http://www.irs.gov/newsroom/article/...157557,00.html

"The vehicle must be placed in service after 12-31-05 and purchased on or before 12/31/10.

The original use of the vehicle must begin with the taxpayer claiming the credit.

a. The credit may only be claimed by the original owner of a new, qualifying, hybrid vehicle and does not apply to a used hybrid vehicle.

The vehicle must be acquired for use or lease by the taxpayer claiming the credit.

a. The credit is only available to the original purchaser of a qualifying hybrid vehicle. If a qualifying vehicle is leased to a consumer, the leasing company may claim the credit.

b. For qualifying vehicles used by a tax-exempt entity, the person who sold the qualifying vehicle to the person or entity using the vehicle is eligible to claim the credit, but only if the seller clearly discloses in a document to the tax-exempt entity the amount of credit.

The vehicle must be used predominantly within the United States."

The credit starts to decrease after the manufacturer sells its 60,000th hybrid. So far, Toyota is the only manufacturer to hit this mark, and any Toyota's purchased after Sept. 30, 2006 can only claim half of the credit. After December, you can only claim 25%. Ford has only sold 7,000 or so hybrids, so is a far way from the 60,000 mark. But once that mark is hit in a few years, the credit will decrease.

Info on the credit from fueleconomy.gov http://www.fueleconomy.gov/feg/tax_hybrid_new.shtml