New lease program: where is the federal tax credit?

The dealer (or Tesla in this case) will collect the $7,500. Depending on your state, you may qualify for a portion of the state incentive. In Colorado we get a percentage based on what we pay vs the total value of the vehicle. But the dealer gets the federal tax credit.

Regarding purchasing the car - it's deducted from your residual value, so in effect you are getting $7,500 off the purchase price should you do that at the end of the lease.

The tax credit will go to the owner.It will be US Bank or Tesla. You can't claim the credit if you purchase at lease end. You will be able to get the $2500 ca rebate.

bayareaever said:

Does anybody know if/how the $7500 tax credit is factored into the new lease prices? I just got two different answers from Tesla reps:

The first rep said it can be taken by the customer at the end of the lease if the customer purchases the car. I had him clarify that this would apply even though the car is used at that point.

That sounded too good to be true so I called again and was told that Tesla/US bank gets the $7500, much like all the other EV leases are structured.

Does anybody know know for sure??

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when leasing, the lessor, not the lessee, get's it. so Tesla (or really the bank that is the lessor) claims the federal tax credit for themselves. no you don't get it at the end of the lease either if you purchase. I wouldn't count on Tesla handing it over to you by deducting it from the residual at the end of the lease either. 3 yrs from now that credit isn't even going to exist anyway so they'd probably laugh at you if you try to get them to deduct it.

yobigd20 said:

when leasing, the lessor, not the lessee, get's it. so Tesla (or really the bank that is the lessor) claims the federal tax credit for themselves. no you don't get it at the end of the lease either if you purchase. I wouldn't count on Tesla handing it over to you by deducting it from the residual at the end of the lease either. 3 yrs from now that credit isn't even going to exist anyway so they'd probably laugh at you if you try to get them to deduct it.

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That's not correct- it's deducted in the lease document as a rebate so both the Cap Cost and the Residual Value are reduced by $7,500. Why are people just guessing at answers and replying? You don't HAVE to reply to a question if you don't know the answer.

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bayareaever said:

Does anybody know know for sure??

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I know for sure - I'm looking at a my EV lease paperwork as I type this.

It shouldn't be a big thing for US Bank to provide you with actual lease paperwork, at least showing all the numbers like gross cap cost, cap reduction, net cap cost, residual, payments, etc. Takes them 10 seconds on their computer.

Where is the Finance Fee in the equation? Sounds like the $7500 plus or minus the few hundred dollars is the finance fee. For your Nissan Leaf, the finance fee should be less than for the Tesla, since the price of the car is less.

bayareaever said:

I'm the original OP. I ran the numbers on a 60D with options totaling $89k cash price. Not factoring in any sales tax or CA state incentives (which don't change with purchase vs lease), the total price to purchase the car at the end of the lease (residual), + all lease payments, + down payment, is within a few hundred dollars of the cash price. (Over the phone, I was told by Tesla rep that they calculate residual based on 52% of base price + 45% of options.) So, that means Tesla/US Bank is pocketing the entire $7500 tax credit. I understand that they would keep a portion, but all of it doesn't seem like much of a bargain for the lessee. When I leased my Nissan Leaf, I got a portion of the tax credit off my total cost. Am I missing anything?

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Good question. The interest payments on the loan amount for the full price of the car over the 36 months lease payments should be considered. That won't be $7500 but perhaps around $2000 ?

Is this a Tesla lease? I am checking my lease paperwork signed back in 6/29 and there is no mention of the "$7500 federal rebate" which is actually a tax credit and not a rebate. I think the $7500 tax credit rule was very clear that it has to be a purchase for personal use but back in June, only business lease was available so I am not sure how Tesla or a business who's leasing the vehicle can claim the tax credit.

Can you recheck your paper? Since I know as a fact that you can never get this money as "cash" but only when you file your 1099 at the end of year to be used as tax credit. (similar to solar panel installation)

eco5280 said:

That's not correct- it's deducted in the lease document as a rebate so both the Cap Cost and the Residual Value are reduced by $7,500. Why are people just guessing at answers and replying? You don't HAVE to reply to a question if you don't know the answer.

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I know for sure - I'm looking at a my EV lease paperwork as I type this.

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I think this is correct. The rebate is in the form of a tax credit. This means when you file a return, you get a $7500 credit against taxes you owe. If you lease AFAIK you don't get the tax credit.

If you really want a good write off lease it as a business expense against your company. I don't think you even need to have the lease in the name of the company but you should consult your CPA to be sure.

llngoc said:

Is this a Tesla lease? I am checking my lease paperwork signed back in 6/29 and there is no mention of the "$7500 federal rebate" which is actually a tax credit and not a rebate. I think the $7500 tax credit rule was very clear that it has to be a purchase for personal use but back in June, only business lease was available so I am not sure how Tesla or a business who's leasing the vehicle can claim the tax credit.

Can you recheck your paper? Since I know as a fact that you can never get this money as "cash" but only when you file your 1099 at the end of year to be used as tax credit. (similar to solar panel installation)

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The bank leasing gets the tax credit. What they do with that is up to them and obviously affects the lease deal. NMAC (Nissan bank) uses the full $7500 as cap cost reduction. BMW is giving part of it (about half).

My thought was the "new leasing program" would actually give you the full cap cost reduction. Doesn't quite seem to be so. It seems like they are giving some.

The best deal is of course - full tax credit towards cap cost reduction. For the bank this means (I think), they have to be large enough and have enough profits that this is a wash for them. Then you lease the car in your name but have your small business pay for the lease. This should get the car down to sub $500 month level for people in the 50% or near tax bracket. Then you factor gas savings and you truly have a cheap car. Of course, in this model, the gas is paid pre-tax also.

But it looks like the new lease is better....

Still amazing that a 3 year lease has the same payment as 6 year purchase with net less upfront cost because of the tax credit.

My stripped p85D is $1593 lease, $1551 purchase. That is with 3% apr. Cut it to 1.5% and the purchase is $1482.

llngoc said:

I think the $7500 tax credit rule was very clear that it has to be a purchase for personal use but back in June, only business lease was available so I am not sure how Tesla or a business who's leasing the vehicle can claim the tax credit.

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Nope it can be taken by businesses as well. See Section 30D of the tax code:
26 U.S. Code § 30D - New qualified plug-in electric drive motor vehicles | LII / Legal Information Institute

Let me rephrase carefully - The lessee (US Bank?) doesn't have to give you the $7500. But they have to account for it.

Is there a third party lease company that can provide you the benefit of the $7,500 rebate? That seems a bit underhanded for the bank to keep the rebate that is meant for your car. They should apply that rebate fee to the money that is due at lease signing.

What's the Money Factor (MF) under the new lease program?

Anyone know what the money factor (MF) is for this new lease?

You convert a money factor to an interest rate by multiplying the money factor by 2400.

eco5280 said:

That's not correct- it's deducted in the lease document as a rebate so both the Cap Cost and the Residual Value are reduced by $7,500. Why are people just guessing at answers and replying? You don't HAVE to reply to a question if you don't know the answer.

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I know for sure - I'm looking at a my EV lease paperwork as I type this.

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EDO5280--you are 100% on the money with this post; thanks.