If I pay for a car, but don't pick it up until the new year, am I still eligible for the 2006 tax credit, or do I have to take the 2005 deduction? There is a new Prius 2005 that is being offered to me, but my dealer says he can only hold it until Christmas.
Beware! The tax law bases the date on first use. If you don't take possession, it will not be used. Make sure you do not take possession of any part of the car, not even the key fob. Essentially, you'll be just making a huge deposit and the actual sale transaction will occur when you accept the car. However, if your paperwork says 2005 and you claim you didn't take possession of the car till January, the IRS will likely try (successfully) to disqualify. I recommend that you not accept this arrangement unless the dealer guarantees to cover your tax credit if the IRS disqualifies you.
I think you have a problem if the dealer reports it as part of his December sales or if financing shows as occuring in 2005. Give him a very large deposit and tell him you will sign all the paperwork on 1/2/06. (Or ask for a $3150 reduction in price to take it sooner.) Springtime
