[AaJay]

All,
I apologize if this question has been asked multiple times. I ordered my Solterra Limited on 04/26/2022 through my dealer and prior to that I paid $250 deposit through the Subaru Website with the intent of collecting it earlier this year however since the Inflation Reduction Act was passed in August 2022 I wonder if the Solterra I ordered in April 2022 would be still applicable for the EV Tax Credit of $7500 assuming it would be grandfathered in prior to the Inflation Reduction Act that went into effect from 8/16/2022.

Source:

https://home.treasury.gov/system/files/136/EV-Tax-Credit-FAQs.pdf

Update, I found the following question on the IRS website:
Q: If I signed a contract to purchase an electric vehicle prior to enactment of the Inflation
Reduction Act (before August 16, 2022) but have not yet taken possession of the vehicle, will the
changes in the Inflation Reduction Act impact my tax credit?
No. If you entered into a written binding contract to purchase a qualifying electric vehicle before the date
of enactment of the Inflation Reduction Act (August 16, 2022), the changes in the Inflation Reduction Act
will not impact your tax credit. You may claim the credit based on the rules that were in effect before
August 16, 2022. The Internal Revenue Service provides information on “written binding contract” here:

Credits for New Electric Vehicles Purchased in 2022 or Before | Internal Revenue Service

If you bought or leased a new, qualified plug-in electric vehicle (EV) in 2022 or before, you may be eligible for a clean vehicle tax credit up to $7,500 under IRC 30D.

www.irs.gov

.

Aaron.

 

[md.]

The key, as you pointed out, is the "written, binding contract". The typical order that everyone made back in spring is generally assumed to not meet that standard, especially since the $250 has been generally considered refundable. Part of it, too, is that the "written, binding contract" part of it is bound by your state law, not federal law, so there may never be a clear-cut list on the IRS web site about what qualifies.

It is generally understood, from the link that you included, that if you have a written, binding contract AND you have a non-refundable deposit AND that deposit was at least 5% of the purchase price, you're virtually guaranteed to be eligible for the $7,500 tax credit for the year in which you take delivery.

Anything short of that, you either need to talk to a tax professional (not sure if even they can make a 100% determination right now), or make the purchase, submit your tax forms with the credit, and hope that it survives scrutiny of the IRS.

Lots more information scattered around this forum. Lots of discussion and there's still a (small) chance that there could be changes to the law or the IRS' implementation of it.

 

[AaJay]

Thank you for your response. To your point trying to find a tax professional to make a 100% will be a challenge for sure. Nonetheless I hope it will be accepted at the time of filling my taxes since I calculated that into the overall purchase, sadly things change. Thanks again.

 

[JayEM]

Thank you for your response. To your point trying to find a tax professional to make a 100% will be a challenge for sure. Nonetheless I hope it will be accepted at the time of filling my taxes since I calculated that into the overall purchase, sadly things change. Thanks again.

If your being able to afford the Solterra is dependent on being eligible for the full $7,500 FTC and you paid only the $250 refundable reservation fee... you might want to either re-consider your purchase or re-assess what you consider to be affordable.

 

[JIm_in_PA]

AJ, the "binding contract" is the real sticking point as has been noted. Personally, I would be concerned with IRS interpretation of "binding contract" at tax time for trying to take the credit so a tax professional's guidance is a good idea for anyone inclined to press for it. "Binding contract" has different requirements in different places and then there's the tax man on top of that. I honestly think that the tax credit for the Soltera is a "lost cause".

 

[AaJay]

AJ, the "binding contract" is the real sticking point as has been noted. Personally, I would be concerned with IRS interpretation of "binding contract" at tax time for trying to take the credit so a tax professional's guidance is a good idea for anyone inclined to press for it. "Binding contract" has different requirements in different places and then there's the tax man on top of that. I honestly think that the tax credit for the Soltera is a "lost cause".

Thank you for your points of view, I feel regardless of tax credit or not I would be happy to go ahead with my Solterra Limited, hopefully it will be delivered this month.

 

[JIm_in_PA]

Oh, I would probably do the same thing if I had an order in...I'd still take it despite the lack of the tax credit.

 

[massolterra]

If your being able to afford the Solterra is dependent on being eligible for the full $7,500 FTC and you paid only the $250 refundable reservation fee... you might want to either re-consider your purchase or re-assess what you consider to be affordable.

I have seen this repeated multiple places. And while you can say that's true on one hand, the FTC is not the only thing that has changed since many of us placed our order. The loss of the FTC AND the sharp rise in interests rates have likely pushed the car outside the affordability zone for many. If only interest rates went up and the FTC remained in place, that would help offset some of the additional costs for many. But for me, the primary difference the FTC has impacted is the value proposition. If the net cost of a VW ID.4 ends up being cheaper because of the FTC, I might not wait around for my Solterra. Even if I can afford to buy something that's more expensive, I would still rather buy a product that is equivalent or better at a lower price if I can.

That being said I'm still holding out for now, and I thought I was going to have to deal with this uncertainty when filing my 2022 taxes, but my Solterra's arrival date was just pushed back to March, so hopefully the IRS guidance will be clearer by then. For me, while I didn't have a 5% deposit, I do have a $1250 deposit, which is like 2.5%, and a signed purchase and sale agreement dated in May that says:

This contract Is not binding upon either dealer or purchaser until signed by dealer or its authorized representative. PURCHASER MAY CANCEL THIS CONTRACT AND RECEIVED A FULL REFUND AT ANY TIME UNTIL S/HE RECEIVES A COPY OF THIS CONTRACT SIGNED BY AN AUTHORIZED DEALER REPRESENTATIVE. PURCHASER MUST GIVE WITTEN NOTICE OF CANCELLATION TO THE DEALER. REFUNDS WILL BE ISSUED AFTER 15 BUSINESS DAYS.

And it's signed by both the dealership and me, which suggests to me it is both written and binding but who knows...

 

[AaJay]

I have seen this repeated multiple places. And while you can say that's true on one hand, the FTC is not the only thing that has changed since many of us placed our order. The loss of the FTC AND the sharp rise in interests rates have likely pushed the car outside the affordability zone for many. If only interest rates went up and the FTC remained in place, that would help offset some of the additional costs for many. But for me, the primary difference the FTC has impacted is the value proposition. If the net cost of a VW ID.4 ends up being cheaper because of the FTC, I might not wait around for my Solterra. Even if I can afford to buy something that's more expensive, I would still rather buy a product that is equivalent or better at a lower price if I can.

That being said I'm still holding out for now, and I thought I was going to have to deal with this uncertainty when filing my 2022 taxes, but my Solterra's arrival date was just pushed back to March, so hopefully the IRS guidance will be clearer by then. For me, while I didn't have a 5% deposit, I do have a $1250 deposit, which is like 2.5%, and a signed purchase and sale agreement dated in May that says:



And it's signed by both the dealership and me, which suggests to me it is both written and binding but who knows...

Thank you for your input, you are completely right, the interest rates and the rising costs of buying the car have to be taken into account. I'm now considering other options even though I could purchase it, I'm a little conflicted :/, There are many other options on the market, I've seen lots of reviews on this car and they appear to be a little underwhelming. Nonetheless if the IRS guidance becomes clearer next year and indeed we can take EV rebate into account that would be a plus, I've yet to hear from the dealer when the car will arrive, they said late December but Its not looking good.

 

[massolterra]

Thank you for your input, you are completely right, the interest rates and the rising costs of buying the car have to be taken into account. I'm now considering other options even though I could purchase it, I'm a little conflicted :/, There are many other options on the market, I've seen lots of reviews on this car and they appear to be a little underwhelming. Nonetheless if the IRS guidance becomes clearer next year and indeed we can take EV rebate into account that would be a plus, I've yet to hear from the dealer when the car will arrive, they said late December but Its not looking good.

You're right the reviews are a little underwhelming. I just shared my experience from test driving a bz4x in a different thread, and after recently test-driving a VW id.4, I'm really regretting not keeping my original id.4 reservation, which could have gotten me an AWD id.4 before the 2023 price increase and before the 2022 models lost their tax credit and before interest rates went up. C'est la vie. My local VW dealership might have a 2023 AWD Pro S ID.4 available arriving before the end of the year (it's unclear if the Chattanooga ID.4s will get $3750 or $7500 in tax credits in 2023) and I might pull the trigger if they do. I only wish the ID.4 had more physical buttons. The BZ4X I test drove wasn't nearly as bad on that front. The ID.4 seems to have a steeper learning curve.

 

[AaJay]

You're right the reviews are a little underwhelming. I just shared my experience from test driving a bz4x in a different thread, and after recently test-driving a VW id.4, I'm really regretting not keeping my original id.4 reservation, which could have gotten me an AWD id.4 before the 2023 price increase and before the 2022 models lost their tax credit and before interest rates went up. C'est la vie. My local VW dealership might have a 2023 AWD Pro S ID.4 available arriving before the end of the year (it's unclear if the Chattanooga ID.4s will get $3750 or $7500 in tax credits in 2023) and I might pull the trigger if they do. I only wish the ID.4 had more physical buttons. The BZ4X I test drove wasn't nearly as bad on that front. The ID.4 seems to have a steeper learning curve.

Ditto I canceled my ID4 reservation for this.

 

[CTValleySubaruGuy]

I have seen this repeated multiple places. And while you can say that's true on one hand, the FTC is not the only thing that has changed since many of us placed our order. The loss of the FTC AND the sharp rise in interests rates have likely pushed the car outside the affordability zone for many. If only interest rates went up and the FTC remained in place, that would help offset some of the additional costs for many. But for me, the primary difference the FTC has impacted is the value proposition. If the net cost of a VW ID.4 ends up being cheaper because of the FTC, I might not wait around for my Solterra. Even if I can afford to buy something that's more expensive, I would still rather buy a product that is equivalent or better at a lower price if I can.

That being said I'm still holding out for now, and I thought I was going to have to deal with this uncertainty when filing my 2022 taxes, but my Solterra's arrival date was just pushed back to March, so hopefully the IRS guidance will be clearer by then. For me, while I didn't have a 5% deposit, I do have a $1250 deposit, which is like 2.5%, and a signed purchase and sale agreement dated in May that says:



And it's signed by both the dealership and me, which suggests to me it is both written and binding but who knows...

I had (have) the same thing, and was intending to use that as a "binding" contract, and let the IRS prove me wrong. $250 reservation, $1000 earnest money on ordering.

Unfortunately, since I won't be taking possession of the vehicle until March 2023 now, it's a moot point for my 2022 taxes.

 

[CTValleySubaruGuy]

If your being able to afford the Solterra is dependent on being eligible for the full $7,500 FTC and you paid only the $250 refundable reservation fee... you might want to either re-consider your purchase or re-assess what you consider to be affordable.

This.

 

[md.]

If your being able to afford the Solterra is dependent on being eligible for the full $7,500 FTC and you paid only the $250 refundable reservation fee... you might want to either re-consider your purchase or re-assess what you consider to be affordable.

This.

It's not always about "affordable", though. You could just feel that's it's not a $50,000 car, but you'd be fine with it as a $42,000 car. That's where I'm at.

 

[JayEM]

It's not always about "affordable", though. You could just feel that's it's not a $50,000 car, but you'd be fine with it as a $42,000 car. That's where I'm at.

Good point.

 

[CTValleySubaruGuy]

Good point.

No argument. There are many factors to consider. But also not the point we were making. "I can't afford it without the credit" is a very different thing from, "Without the credit, I don't feel it's worth what they're asking for it."

 

[JayEM]

No argument. There are many factors to consider. But also not the point we were making. "I can't afford it without the credit" is a very different thing from, "Without the credit, I don't feel it's worth what they're asking for it."

Unfortunately, a lot of the competition lost the credit too, and some are only being sold for way over MSRP, so it's a tricky calculation. For some, the logical alternative will be "keep driving what I'm driving now".

 

[442]

Unfortunately, a lot of the competition lost the credit too…

Or, fortunately for Subaru

 

[JayEM]

Or, fortunately for Subaru

Indeed. I was speaking solely from the perspective of a potential buyer.

I passed up 3 (or was it 4) chances to purchase a competing vehicle during the summer - if only I'd been willing to fork over $5 grand. The first one I turned down would have been eligible for the $7,500 FTC (it was before 8/16), so I actually would have come out ahead, financially - as it turned out. Ultimately, I realized that what I want is the Subaru. So, yeah, fortunately for them.

 

[voxel]

It's not always about "affordable", though. You could just feel that's it's not a $50,000 car, but you'd be fine with it as a $42,000 car. That's where I'm at.

Same. I consider the Solterra Limited to be a $40-$45K car. Slightly above a Bolt but less than an mid trim Ioniq 5 and EV6. I also consider an ID.4 Pro S a $40-$45K car - having owned a 2021 and test driven a 2022 and 2023. If the tax credit is only $3750 for an ID.4 I’m not convinced the value is there and I’d recommend folks look at PHEVs or ICE SUVs.