To buy, or not to buy?

Discussion in 'Clarity' started by Mrmayhem4, Aug 3, 2019.

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  1. K Wolmar

    K Wolmar New Member

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  3. I’d buy it. Oh wait, we did buy it.

    We weren’t actually looking to buy a car this soon. The now expired $5K Honda incentive did the trick. Our state, Oregon, has an additional $2,500 rebate. We’ll see what happens with the Fed credit.

    I had a 15 year old car that we sold for $3K. As much as I tried to justify keeping it, it’s paid for, the repairs are less than a car payment, it’s deprecated to nothing so there’s no loss there. It became a challenge to accept $500-600 repairs on a $3K car, plus the inconvenient failures that went neglected. And there was a looming $1200 major service on the horizon. Even at 35-40 mpg I put at least $100/month into the fuel tank.

    By the end of tomorrow I’ll have put about 500 miles on over the past 2 weeks and maybe used a gallon of gas. That would be at least a $50 fill up in the old car. Do you see where this is going?
     
  4. insightman

    insightman Well-Known Member Subscriber

    Honda's Clarity website says:
    > All Clarity Plug-In Hybrid owners are eligible for up to a
    > $7,500 tax credit through federal tax credit programs.

    Based on the size of the Clarity's HV battery and the fact that Honda has yet to sell 200,000 EVs, the Clarity still qualifies for the $7,500 tax credit. Certain people in our nation's capital hate electric cars and they may change the rules, but it hasn't happened yet.

    Of course, you must have at least $7,500 in federal tax liability to take the full $7,500 federal EV tax credit. If you have less liability, you can only take that much tax credit. Being mostly retired, we didn't have $7,500 in tax liability, so we converted enough regular IRAs to Roth IRAs to generate $7,500 in taxes. Now we'll never have to pay taxes on those Roth IRA funds and after age 70-1/2 we won't be forced to take the minimum annual distribution from that Roth account.
     
    Last edited: Sep 13, 2019
    Ceetee, Kerbe and jdonalds like this.
  5. jdonalds

    jdonalds Well-Known Member

    Good one. I should have done that too. But I did take extra money out of an IRA to cause the $7,500 taxes which were then taken care of by the tax credit. We also had (just under the wire) a low enough income to quality for the California $3,500 tax break. Those two brought our bill down from $40,600 to $29,600. Then we sold the Prius we were replacing (owned outright) for $14K which brought our out of pocket down to $15,600. I'd take that deal again all day long.
     
  6. That is an important point.
    Several members of this forum rushed to buy the earliest of the Clarities in December of 2017 when it was unclear if the credit would be extended beyond the end of that year.

    I'm just going to play it cool for now. With the Democratic majority in the US House, I'd consider it more likely to be extended this year than it was in 2017.
     
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  8. 2002

    2002 Well-Known Member

    It's not a question of extension the credit has been going on for over ten years and only phases out per manufacturer when the manufacturer reaches 200,000 vehicles sold. Tesla reached that level last year, the Tesla credit was reduced to $3,750 on January 1st, to $1,875 on July 1st and it ends on December 31st.

    Other than Nissan no other manufacturers are close to those numbers, so barring any legislative action the credit will likely continue for several more years. In 2017 the house passed a budget for 2018 which repealed the credit but the senate budget did not. Although repeal seemed unlikely many people bought electric vehicles in late 2017 in case it got repealed, which wasn't known for certain until about December 20th, so a lot of electric cars were sold in December 2017. Which also happened to be the month that Clarity debuted, although they were hard to find and people were paying MSRP because they wanted to make sure they got the credit.
     
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  9. K Wolmar

    K Wolmar New Member

    I apologize as I'm just not getting it. The 200,000 vehicle thing doesn't apply yet to Honda and is only starting to affect Tesla. I get that. But this

    Several provisions that expired at the end of 2017 were not extended for 2018 (or 2019), but are still under consideration in Congress to be extended for 2018 and through the end of 2019.

    from that IRS link suggests that legislative action would be necessary for the $7500 credit to apply for cars purchased this year (the credit in question is listed below that quote as one that has expired).
     
  10. K Wolmar

    K Wolmar New Member

    The IRS actually won't even answer the question about that tax law since it isn't tax season.

    Any tax experts out there on this forum?
     
  11. 2002

    2002 Well-Known Member

    Do you see it listed under "The entire list of expired provisions is below" because I don't. On the first part of the page (titled Legislative Impact on Tax Forms) it lists the forms that are used for some of items. Two of the items listed are:

    - Credit for certain nonbusiness energy property
    - Credit for 2-wheeled plug-in electric vehicles

    Both of these items use form 8936 Qualified Plug-in Electric Drive Motor Vehicle Credit which is the same form that we (and other EV and PHEV owners) use to apply for the tax credit for our cars.

    Oops I didn't realize that is what you are looking for. Disregard everything I just said.
     
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  13. K Wolmar

    K Wolmar New Member

    So, again, maybe I'm totally misreading this. But under

    "Below are the most commonly used items that are expired for 2018, and the impacted forms, instructions, schedules, and publications."

    I see

    Credit for certain nonbusiness energy property
    ...
    Form 8936, Instructions, Qualified Plug-in Electric Drive Motor Vehicle Credit

    The IRS page dates March 19, 2019, and I can find no record of Congress passing a law to continue those credits.
     
  14. 2002

    2002 Well-Known Member

    They don't have to pass a law to extend the plug-in credit. They would have to pass a law to repeal it.

    It is the nonbusiness energy property credit that has expired, not the plug-in credit. The IRS site is listing forms related to the nonbusiness energy property credit.

    So why is form 8936 listed as one of the related forms for the Non-business Energy Property Credit? I guess while we are asking that we can also ask why is Pub 972, Child Tax Credit also listed as being related to the nonbusiness energy property credit also. Well that takes us into the thickest part of the weeds in the IRS jungle.

    There are two different credits going on:

    Residential Energy Efficient Property Credit (REEP)
    Non-business Energy Property Credit

    REEP is about solar electric, solar water heaters, etc. This credit had expired but was extended and continues.

    The Non-business Energy Property Credit is primarily about improvements such as heat pumps, energy efficient windows, etc. This credit expired after 2017 and has so far not been extended.

    Both credits are claimed on form 5965. REEP is entered into Part 1 of the form, Non-business Energy Property in Part 2 (on the 2018 form Part 2 is listed as "Reserved for Future Use").

    In the instructions for the REEP part of form 5965 it lists some other credits that the taxpayer might be also claiming which can affect the amount of the REEP credit. They are:

    • Credit for the elderly or the disabled.
    • Adoption credit.
    • Mortgage interest credit.
    • District of Columbia first-time homebuyer credit.
    • Alternative motor vehicle credit.
    • Qualified plug-in electric vehicle credit.
    • Qualified plug-in electric drive motor vehicle credit

    The amount of these credits is entered into a worksheet that calculates the amount of REEP credit allowed.

    However looking at prior years when nonbusiness energy property credit was included these limitations never had anything to do with the nonbusiness energy property credit, only the REEP credit. In prior years the nonbusiness energy property credit was only limited by the credit for the elderly or the disabled.

    So personally I think it is a mistake on the IRS site that form 8936 Qualified Plug-in Electric Drive Motor Vehicle Credit is listed as one of the affected forms for the nonbusiness energy property credit. I suspect someone just lazily listed everything related to form 5965. But even if it had been related it would just mean that the amount of the nonbusiness energy property credit might be reduced if someone is also taking the plug-in credit that same year. It would not mean that the plug-in credit has also expired.

    But that is based solely on having recently stayed at a Holiday Inn Express. You will need to consult with a tax advisor if you want to be sure.
     
    Last edited: Sep 13, 2019
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  15. su_A_ve

    su_A_ve Active Member

    When doing your math, don't forget to add about $1000 for Honda Care. Unless you know for sure you will get rid of the car before the 3/36K warranty expires, there's way to much electronics in this car. Even with the battery system having an extended warranty, the rest of the car absolutely needs it. Reach out to Sacussi or Hyannis. Do not - I repeat - DO NOT, buy it through your dealer or whatever "other" warranty they may offer. These two dealers sell Honda Care basically at cost. Dealer would probably want to charge you at least twice as much.

    On another car, dealer quoted me $1800 for Honda Care. My quote was $800. The dealer insisted on letting them match my quote. When I showed it, finance manager said he needed to charge me at least $100 more than the quote to make a profit. Oh, plus sales tax... I just laughed...
     
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  16. KentuckyKen

    KentuckyKen Well-Known Member

    +1 on getting Honda Care and not some third party extended warranty. It’s backed by Honda so no worries about it being there when you need it. And no hassles with paperwork or waiting for reimbursement since your info will be in Honda’s system and will pull up at any Honda dealer.

    Remember there are different levels of time and mileage duration in Honda Care. I got the D80 (8 yrs and 100,000 miles) for $1,304 last year from my dealer after I showed them the Hyannis quote and made them match it. FWIW, the Finance guy at the dealership said that was only $50 above his cost. (May or may not be true) So I said, you want to sell me this car and make $50 too or not? He did but grudgingly.

    Interesting enough, he did not mention Honda Care at all and pushed some third party warranty which I assume is because there was more mark up, commission, and profit on those.
    He also did not mention Honda’s 0.9% financing that was available at that time. Again I’m assuming it was because there was more reward for them to steer me to another loan.
    I had to specifically ask for Honda Care and Honda financing to get them. People who don’t do their homework are most often than not taken advantage of by unscrupulous dealers.
    I hate dealing with dealers.
     
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  17. K Wolmar

    K Wolmar New Member

    Thanks for all the help. I couldn't pull off the tax situation so I went CPO. Loving it so far.
     
  18. K Wolmar

    K Wolmar New Member

    My dealer also quoted me $1800 for the extended warranty and claimed they were only making $100 on it.
     
  19. K Wolmar

    K Wolmar New Member

    Can any of you speak to the legitimacy of Hondacare through Sacussi or Hyannis? It just seems crazy how much cheaper they are selling it.

    Or for that matter the value of Hondacare itself?
     
  20. Lowell_Greenberg

    Lowell_Greenberg Active Member

    I dealt with Hyannis- and it is legitimate. As for Honda Care, it should offer better benefits as compared to any third party insurer.

    Sent from my SM-G975U using Tapatalk
     
  21. MPower

    MPower Well-Known Member

  22. KentuckyKen

    KentuckyKen Well-Known Member

    Hyannis quote is legitimate and is the real Honda Care. I made my dealer match their $1,304 price in Feb of 2018 so I could roll that cost into the 0.9% Honda financing.
    FWIW, my dealer complained that it was only $50 over their cost (but I take anything a dealer says with a large grain of salt!)
     
  23. leop

    leop Active Member

    My local dealer, from whom we bought our Clarity, matched the online price from Hyannis Honda.
     

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