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IRS Recaptures Rules Tax Credit When You Sell/Trade your Hybrid?

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IRS Recaptures Rules Tax Credit When You Sell/Trade your Hybrid?

  #1  
Old 05-05-2007, 11:03 AM
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Default IRS Recaptures Rules Tax Credit When You Sell/Trade your Hybrid?

I'm thinking about trading my 2006 Mariner for the new 2008 model. Are the any limitations on how long you must own a hybrid vehicle before you can sell or trade it? I've owned it for just under one year and claimed the tax credit on my 2006 taxes. If I buy a new 2008 and trade my 2006 will the tax credit I claimed by subject to recapture? Or will the tax credit on the new 2008 be limited?
 
  #2  
Old 05-05-2007, 11:33 AM
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Default Re: IRS Recaptures Rules Tax Credit When You Sell/Trade your Hybrid?

I don't see anything on the IRS site that mentions length of ownership as a qualifier/disqualifier.

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

I think you safe.
 
  #3  
Old 05-06-2007, 02:21 PM
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Default Re: IRS Recaptures Rules Tax Credit When You Sell/Trade your Hybrid?

A good question to investigate. I know with home ownership, to avoid any capital gains on your primary residence, you must hold it for a minimum period of time.
 
  #4  
Old 05-07-2007, 01:12 PM
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Default Re: IRS Recaptures Rules Tax Credit When You Sell/Trade your Hybrid?

There is a period of time that you have to keep it, but I can't find it anywhere. I did find a message board where someone actually called the IRS and asked them that very question about 6 weeks ago and they didn't know. The person on the phone stated that she would have to check with someone higher up. The OP never posted back with an update as to if he ever got a response.
 
  #5  
Old 05-07-2007, 03:42 PM
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Default Re: IRS Recaptures Rules Tax Credit When You Sell/Trade your Hybrid?

There is nothing as far as I know regarding a recapture of the credit for Hybrids except the right to have one. IF and I repeat IF there was one, I'm sure it would be similar to the QEV recapture. The Qualified Electric Vehicle recapture, in a nutshell, occurs within three years of ownership IF the vehicle ceases to be a QEV (ie. you put a Hemi in your golf cart). If that happens then a portion of the credit is lost.
Considering how many taxpayers have not been able to take the credit, I don't see it worthwhile in terms of increased revenues to enact a recapture.
So for now, there is NO recapture of the credit for hybrids.

Here's section 30B(h)(8) which is referred to on Form 8910 page 2 regarding the recapture:

"(8) RECAPTURE- The Secretary shall, by regulations, provide for
recapturing the benefit of any credit allowable under subsection
(a) with respect to any property which ceases to be property eligible
for such credit (including recapture in the case of a lease period of
less than the economic life of a vehicle)."

So there you have it. There currently is no regulation regarding section 30B.
 
  #6  
Old 06-05-2007, 06:46 PM
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Default Re: IRS Recaptures Rules Tax Credit When You Sell/Trade your Hybrid?

I was wondering the same thing. I only found this statement on hybridcars.com

"The new law for the hybrid tax credit might require taxpayers to recapture their hybrid tax credit if they re-sell their hybrid car or truck."

http://www.hybridcars.com/federal-incentives.html
 
  #7  
Old 06-06-2007, 12:40 PM
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Default Re: IRS Recaptures Rules Tax Credit When You Sell/Trade your Hybrid?

This is starting to worry me.

I bought an '05 FEH in 2005. For that, I was able to take a $2,000 deduction, not a credit, when I did my taxes for '05. (They changed it to a credit in '06). I traded that one in for an '07 FEH in September of '06. When I did my taxes for '06, it didn't say anything about selling or trading in a hybrid, at least that I saw. I only saw a section for if you purchased one in '06. Since I had, I filled out the worksheet and got the $2,600 credit.

I hope they don't come back and say I have to give either the money I gained from the deduction or the credit back.
 
  #8  
Old 06-07-2007, 02:15 PM
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Default Re: IRS Recaptures Rules Tax Credit When You Sell/Trade your Hybrid?

Originally Posted by a069024 View Post
I've owned it for just under one year and claimed the tax credit on my 2006 taxes.
Yikes! Do you mean in the US you have to claim it on your income taxes? In Canada it's (going to be) a form that you send in for a refund of the sales tax. That's it, that's all. The credit only applies to a new vehicle, so there's no problem when you resell later (although who would ever want to? )
 
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