Taxpayer asks:
Hi Tax Girl!
My husband bought a new car this year while all the tax credit for new car purchase commercials were going on. The catch? It’s a 2009 car, but was previously owned. Does it count as a New Car for the purposes of the new car tax credit?
Thanks so much for your help!
Enjoying the new-to-us car
Taxgirl says:
Sorry guys, I have bad news. The year of the car doesn’t matter for purposes of the credit. Used or pre-owned cars do not qualify for the deduction, even if it’s “new to you.”
But look on the bright side: you have a new car!
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
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Logical question! After all, the first-time homebuyer credit doesn’t have to be for a new home — it just has to be for *a* home. Obviously, the new-car tax credit is to get people to buy new cars (which is stupid and wasteful, as was “Cash for Clunkers,” but I digress). But this goes to illustrate one of my beefs with Congress — they love to subsidize industries through tax breaks, even though no way would they be caught dead subsidizing them with spending, because that’s “Socialism” [eye roll]….
The questioner may be able to get some use of the sales tax. If adding the sales tax to the “safe habor” is about the same or more, it can be used on the sch. A in place of the state income tax. This (2009) is last year you may use this little issue and I am sure it has been welcome to those in the seven states with out a state income tax.
Excellent point, Rick!
Urbie, As you know, I was no fan of this bill. I think Congress got it wrong on sooo many levels. Your comments are well taken.
This is a possible income tax deduction for the sales tax for people that otherwise would take the standard deduction. It is not a credit.
I am sure they saved far more on this slightly used vehicle than the tax deduction. So they have a “new to you” vehicle at a good financial deal, and if they itemize, the additional sales tax may well still save them some taxes.
Sounds like a Merry Christmas to me.
Tom, you’re right that it’s a deduction, not a credit. And there is a big difference.
It’s being referred to as a credit in the media, which is what’s driving the bus. Even car dealers advertise it as the “new car credit.” It’s almost 2nd nature now to call it a credit.
Excellent article!