Economic stimulus legislation passed in late 2008 and early 2009 created two new tax credits for electric vehicles, including one for four-wheel, low-speed, plug-in electric drive vehicles. What does that sound like? A golf cart. What does it look like? A golf cart. But don't call them golf carts.
The law specifically says this credit does not apply to vehicles manufactured primarily for "off road" use, such as on a golf course. In guidance issued in late June, the Internal Revenue Service defined qualifying vehicles as, well, street-legal golf carts.
The amazing thing about this credit is that it can cover 100% of the purchase price of the vehicle, up to $15,000. There are no income limits on taxpayers claiming it (as there are for other lucrative breaks such as the first-time home buyer's tax credit or the child tax credit). And, it doesn't get taken away through sneaky back-door tax provisions, such as the Alternative Minimum Tax either.
All you need to do to claim the credit is to buy and take title to a qualifying golf cart...I mean "neighborhood electric vehicle" by Dec. 31, 2009. Naturally, you also need to owe enough income tax to make claiming the credit worthwhile. That actually makes this break best for relatively high-income taxpayers, who are likely to pay thousands of dollars to Uncle Sam.
It's worth mentioning that tax credits are far more valuable than tax deductions. Tax deductions just reduce the amount of income that's subject to tax, which saves a taxpayer in the 30% bracket roughly 30 cents for every dollar spent. Tax credits, on the other hand, provide a dollar-for-dollar reduction in the tax you owe. Thus, if you owe Uncle Sam $6,500, but have a $6,500 tax credit for buying a neighborhood electric vehicle, you owe zero. Zip. Zilch. Nada. Uncle Sam just paid for your golf cart.
So why are you only hearing about this sweet deal now? After the IRS issued guidance last summer, it left it to manufacturers to come up with products that met their guidelines. Manufacturers had to scramble to do that and then get "certified" for their tax credits. Twenty three manufacturers, including American Sportworks and Cruise Car Inc. managed to do just that, but some just recently. Club Car, for example, announced that its first qualifying vehicle, the Villager 2+2 would begin shipping in the first week of November, just in the nick of time for the credit.
The one tricky thing: The size of your tax credit will depend on the vehicle you buy because it's calculated based on the battery's range. Sometimes the tax credit will cover the whole cost of the golf cart. In other instances, it will cover only half or less of the cost. Club Car, for example, says that its new Villager 2+2 gets a $4,168 credit, which is just shy of half the vehicle's $8,876 base price. Meanwhile, Colin Reilly of FreeElectricCar.com says he's selling Zone Electric four-seaters for $6,496.53--precisely the amount of this vehicle's federal income tax credit.
"Our manufacturer worked very hard to build their battery range to get the best credit possible and then we worked to cut our price so that we could offer this to the consumer for free," Reilly told me in an interview.
You will still have to pay for shipping. But that's about $500 for a $6,500 golf cart. You'll also have to wait about 12 weeks for delivery because Reilly says he's getting about 300 orders a day.
Too good to be true? That's what I thought, so I looked for complaints about Reilly and his company on the web. Didn't find any. Then I called the Better Business Bureau. The company is registered with the BBB's Tucson office. They've been in business since 2000, get an A-minus rating, and have no outstanding complaints. That's not necessarily a Good Housekeeping seal of approval, but there are no blazing red flags that this is a scam either. It seems like the "too-good-to-be-true" part is a function of the tax code, not the retailer.
But the deals are good elsewhere too. Your mission, if you choose to accept it, is to pick a qualifying vehicle and take title before the tax breaks run out.
Want to know what vehicles qualify and how much of a tax break each can get? Follow the links in this listing of qualifying manufacturers to the IRS' page showing their tax credit amounts. Make sure you talk to your tax accountant, too, to ensure that you're paying enough tax to get some mileage from this credit. And be meticulous about following the rules.
Here are the manufacturers, with links to the low-speed electric vehicles that qualify and the tax credits they get:
Bad Boy Enterprises Inc.
Bad Boy Mowers Inc.
Club Car Inc.
Cruise Car Inc.
Fairplay Electric Vehicles
Global Electric Motorcars (GEM)
J H Global Services Inc.
Odyne Systems LLC (Navistar International)
Rolling R Golf Cars LLC
Ruff & Tuff Electric Vehicles
Stealth Manufacturing LLC
Tomerlin Automotive Group
Wheego Electric Cars Inc
Western Golf Cars Mfg Inc.
Zenn Motor Company
Zone Electric Cars
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