Spinnaker

According to two dealers I have been talking to, Toyota/Lexus informed them by letter on Friday Sept. 22 that the 2007 model has now been added to the IRS list of vehicles qualified for the hybrid tax credit for tax year 2006. Until Sept. 30th that credit will be as much as $2200 (directly offsetable against tax you owe) if you have taxable income and it is not already offset by other tax credits. After Sept. 30th, the credit declines by half to $1100 until Dec. 30th. Previously, the only the RX400h on the tax credit list was the 2006 model.

Legal disclaimer so no one relies on this information: I am not a tax professional and not giving tax advice here, just passing along some information. I was unable to confirm from the IRS website that this information is correct, except that the 2006 RXh is still listed. If you buy an 07 be sure to get a copy of the tax letter from the dealer.

Good luck!

hendjaz

Unfortunately the IRS website has the below information which does not include the 07 400h on the list, still only the 06 model. As indicated this is not confirmed by the IRS so if the Lexus dealers have some authority for what they are saying they should provide it so it can be confirmed. A letter from the dealer will not fly with the IRS so I would not count on that as a basis for making a claim for the credit.

Best to check with an accountant to see if the below information from the IRS two days ago is somehow incorrect. Below is verbatim from the IRS website and lists the qualifying vehicles and the amount of the reduced credit going forward in October.

Toyota Hybrid Begins Phaseout on October 1

IR-2006-145, September 20, 2006

Washington—The Internal Revenue Service announced today that Toyota Motor Sales, U.S.A., Inc. has submitted quarterly reports indicating that its cumulative sales of qualified vehicles to retail dealers has reached the 60,000-vehicle limit during the calendar quarter ending June 30, 2006. Under the current tax law, the credit for buying a hybrid vehicle begins to phase out during the second calendar quarter after the quarter in which the company sells its 60,000th hybrid or lean burn technology vehicle.

The credit for all new advanced lean burn technology motor vehicles or new qualified hybrid passenger automobiles or light trucks manufactured by Toyota Motor Corporation will begin to phase out on Oct. 1, 2006.

Vehicles purchased before Oct. 1, 2006 qualify for the full credit. For Toyota hybrid vehicles bought on or after October 1, 2006, and on or before March 31, 2007, the credit is 50 percent of the otherwise allowable credit amount. Taxpayers buying vehicles on or after April 1, 2007, and on or before September 30, 2007, can only get 25 percent of the credit.

Here are the credit amounts for Oct. 1, 2006 – March 31, 2007:

2005 Prius — $1,575
2006 Prius — $1,575
2006 Highlander 4WD Hybrid — $1,300
2006 Highlander 2WD Hybrid — $1,300
2006 Lexus RX400h 2WD — $1,100
2006 Lexus RX400h 4WD — $1,100
2007 Camry Hybrid — $1,300
2007 Lexus GS 450h — $775

Here are the credit amounts for April 1, 2007 – September 30, 2007:

2005 Prius — $787.50
2006 Prius — $787.50
2006 Highlander 4WD Hybrid — $650
2006 Highlander 2WD Hybrid — $650
2006 Lexus RX400h 2WD — $550
2006 Lexus RX400h 4WD — $550
2007 Camry Hybrid — $650
2007 Lexus GS 450h — $387.50
Beginning October 1, 2007, taxpayers who buy a Toyota hybrid cannot claim the related tax credit.

Spinnaker

Hendjaz --I don't disagree with you about the information on the IRS website. The fact that the IRS may not yet have updated their website with new information is exactly why I added this new thread. With only one week to go before Sept. 30, some prospective buyers may still believe (an act on out of date information) that they must buy last year's model to obtain the tax credit. I think this is worth sharing. If they learn about it after Sept. 30 the value of the tax credit will be halved for the remainder of tax year 2006.

So, I am not sure about the 'scold' you gave me in your post as there is nothing in your post that disagrees with what I said. You have added information that I don't disagree with (i.e. it would be wise to confirm this information from a source other than the dealer).

Regards

hendjaz

Spinnaker,
Sorry, no scolding was intended. I just wanted to get the IRS information out there as it was very current (Sept. 20th) and still did not list the 07. I am watching this closely as we just took delivery of our 07 400h yesterday with the understanding that it did not qualify for the credit, having checked with our accountant as well as the IRS site. Our dealer is not indicating that the 07 qualifies for the credit but perhaps other dealers are saying differently.

Still hoping for a last minute change of events so am encouraged by your information and hope that it pans out.

jobber99

I just don't believe that as the 07 Highlander Hybrid and 07 GS450h are listed, that the 07 RX400h won't somehow be on this list.

Spinnaker

Hendjaz -- congratulations on your new purchase. I hope to take delivery on mine this week. With luck and confirmation from IRS, we will have not only the generation 5 nav. system, but also a tax credit. The information about the '07's inclusion on the list was only communicated to me on Friday Sept. 22, so it is quite new.

Jobber 99 -- I agree that the omission of the 2007 RXh was illogical. That's why I am inclined to believe that it has now been added. I am more confident that this information is correct because it was independently confirmed by dealer sales managers from two stores, and a third had told me a week or two earlier that Lexus had requested that it be included, so this is a logical outcome of that application.

Regards

hendjaz

I haven't seen the 07 Highlander Hybrid on the list, just the 06. This still seemed to be the case in the Sept. 20th update. Is there a different list out there with the 07 HiHy on it?

It seems only the new Toyota/Lexus 07 models are on the list, such as the Camry and 450h hybrids. Those that had 06 models don't seem to be on the list for the 07 model year.

jim256

The '07 400 just became available, while the 450 and Camry have been out for some time, and I believe their authorizations coincided with their approximate introduction (the press release was 4/25/06 for the 450h). There is no reason to predict based on the enabling rules that the 400 will not be eligible, and at least 2 dealers have confirmed it, so I'd say the topic author probably has it right and the IRS site is just not updated yet. Thanks to him for posting the latest he had. Or, someone can wait past Sept 30 and be sure to lose some or all of the credit, and see what the IRS posts.

mary65

we asked a dealer about the credit and letter for a 2007 rx400h. He said lexus headquarters recently sent out emails to him about the credit reduction for the rx400h at the end of september without mentioning a model year. He repeatedly told me that the 2007 would qualify, since no model year was mentioned in the email and lexus would have been specific if it only applied to 2006 models. I asked him to supply me with a letter from his dealership guaranteeing that the 2007 models would qualify. He was a little rude with his response, saying they would not and I should speak to my accountant.

All I want is proof from either lexus with a guarantee, or the correspondence that they had with the government approving this car last minute for the full $2,200 credit. I have a feeling that the 2007 RX400h will only qualify for the half credit of $1,100, since it has been released so close to the deadline. I would not trust the dealers unless they supply some kind of full guarantee. They will say anything to sell the car.

Spinnaker

Mary65 - was your conversation on or after Friday Sept. 22? If not, this information is more recent.

Regards

mary65

I spoke to the salesman just yesterday, 9/23.

Spinnaker

Mary65 - This would make it good advice given by Hendjaz earlier, which is to independently verify this information (if you are relying on the tax credit to justify the purchase).

kidlex123

Although nothing is a guarantee in life except death and taxes, as an inactive CPA (I used to practice but still have an "inactive" license) who has vast experience with these issues I would bet that the tax credit for the hybrid applies to the 07 unless the IRS specifically excludes it (which it could do, but has not, and will not do because they have bigger fish to fry). Tax law is not concrete and the way it stands now any tax accountant worth his salt would claim that credit for his client. The list on the IRS web site is one year old and is meant in spirit to reflect "models" that qualify that are purchased in 06 -- that is the important point -- purchased in 06 as a new car -- they weren't intentionally excluding 07 models purchased in 06. As for me I do my own taxes and will have no reservations taking the credit -- but as for you I recommend consulting an accountant and paying him alot of money to tell you the same thing. Hopefully the IRS will update the list of qualifying cars to include the 07 so you people do not get your panties in a bunch, but dont count on it.

spwolf

MY 2007 is just marketing... when IRS say 2006, they mean purchased in 2006. They could care less if Toyota calls it MY 2007 or MY 2006 or MY 2002.

CrazyMPG

iTrader: (4)

i wonder if they will be extending the tax credits...I've been hearing that they (the senators, house members) may vote to have it extended to further promote people to buy more hybrids. Although I am not sure...I've just been hearing stuff like that...haha...