After looking at Kelley Blue Book values (kbb.com), using prices somewhere between "private sale" and "dealer retail", and looking at the inflated asking prices for '04s and '05s on Autotrader.com, I think almost everyone with one of these models, with average mileage or below, and with no body damage, could break even or make a profit, taking into account the '06 tax break, while getting rid of their present mileage and gaining one or two model years, by doing this. If you can get a Costco discount from an MSRP-selling dealer, even better. You have to input your specific optional equipment, and mileage, at kbb.com to get the market price IN YOUR AREA. At Autotrader you can see what the market is in your area, regionally and nationally. It would at least be close. YMMV. B)
I am not sure the IRS would let you get away with that. I would look in to that aspect. Crossing the IRS is not good.
Taking the tax brake twice. It would be subject to interpretation. You have to get the car for personal use not for resale. It might be OK or not depending on how they might rule on the situation.
I'm not suggesting taking any tax break twice; just selling your present Prius (on which you may be claiming the "old" break when you file your '05 taxes next spring, assuming you bought it in calendar '05) and buying a new one after 1/1/06 (on which you presumably would claim the new break when you file your '06 taxes in '07).
You do have to give back the tax break on the '04-'05 if you sell it within 3 years. I believe this may be a pro rated amount, but I am not sure.
I did not know that. Hmmm, have to call my tax guy. Even if I had to give back, say, $250-300 of the '04 tax deduction, it would STILL work.
But only in VERY limited circumstances: You must recapture the deduction for clean-fuel vehicle property if the property ceases to qualify within 3 years after the date you placed it in service. The property will cease to qualify if it is changed in any of the following ways. 1. It is modified so that it can no longer be propelled by a clean-burning fuel. 2. It ceases to be a qualified clean-fuel vehicle property (for example, by failing to meet emissions standards). 3. It becomes nonqualifying property, defined earlier. Sales or other dispositions. If you sell or otherwise dispose of the vehicle within 3 years after the date you placed it in service and know or have reason to know that it will be changed in any of the ways described above, you are subject to the recapture rules. In other dispositions (including a disposition by reason of an accident or other casualty), the recapture rules do not apply.
Then do it in reverse order: buy '06, put '05 up for sale next day. Prices for used '05s will not drop precipitously in January in this market.
Well you could claim that you had to have the iPod MP3 jack in the 06! Surely the IRS would understand the necessity of having a place to plug your iPod in? B)
