Tax Carnival #27: Waiting for the Tax Ball to Drop
Jan. 1 brings new state laws,
tax and otherwise

Year-end auto buying tips

I love those car dealership end-of-year closeout ads that are flooding my TV screen. Those guys really, really, really want to get rid of the cars still stuck on their lots.

Cardealersale_2The major impetus for
the "Sale!
Sale! Sale!"
announcements used to be
the inventory tax, the levy assessed on property held by businesses at the end of the year. Most most states and localities have done away with the inventory tax, but the year-end effort to unload autos remains. It's a proven way to move old models to make room for the newer versions.

If you're thinking about taking an auto dealer up on his or her offer, first of all be sure that you are indeed getting a deal. Here are some suggestions from the blogosphere:

Careful with that financing: Of course, if you finance the vehicle, you also want to be careful that you get the best deal for you, not for the dealer. Check out this cautionary loan tale from Tim at The Mess That Greenspan Made.

Under no circumstances fall for the pay-stub loan/refund anticipation loan option to help you buy a vehicle. There's no way to accurately tell if you will indeed get the amount back from the IRS that these loan offers (including many car dealers) say you will. They just want to close the deal and move the vehicle off their lot. You'll be left dealing with any financial and tax follow-up.

And not to be a total buzz-kill about your auto shopping, but you also should take a look at these top 10 auto scams, just to be safe.

Automotive tax breaks: One other consideration is taxes; yours, not the car dealer's.

If you're thinking of a hybrid, buying one today can help cut your 2007 tax bill (blogged about many times previously; if you click here, this post will show up first, so keep scrolling down for all  the hybrid blog entries).

While the popular Toyota Prius no longer offers a tax break, many other autos do. In fact, if you want a Honda, which is second in the hybrid race, buying one today will get you a bigger tax write-off than if you wait until 2008; details here.

And American automakers are finally starting to get the hang of this hybrid thing.

The IRS last week certified five 2008 GM hybrid models as qualifying for the tax credit, with tax breaks as much as $2,200. Previously, many of the domestic models weren't as fuel-efficient, meaning their tax credits were much smaller.

Here are your new GM hybrid choices and credit amounts:

  • Chevrolet Tahoe Hybrid (2WD) -- $2,200
  • Chevrolet Tahoe Hybrid (4WD) -- $2,200
  • GMC Yukon Hybrid (2WD) -- $2,200
  • GMC Yukon Hybrid (4WD) -- $2,200
  • Saturn Vue Green Line -- $1,550

GM now has seven 2008 models that are IRS-certified hybrid vehicles. The Chevrolet Malibu Hybrid and its $1,300 tax credit and the Saturn Aura Hybrid, also with a $1,300 break, were previously OK'ed.

Happy auto shopping and drive safely, especially if you take the new wheels out for a New Year's Eve celebration tonight!

Comments

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I am very thankful with all your suggestions. This made me an idea to buy most closely in the ending of the year.

-seff-

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