The government is coming up with new ways to incentivize you to “go green”. Cash for clunkers got us to trade in those old gas guzzlers for new clean and efficient vehicles. Believe it or not there are even government credits that allow some people to get paid to ride their bicycles to work. Now the latest government credit catching traction is the Low Speed Vehicle Credit. However as with all things, if a deal sounds too good to be true, you might want to check in with your tax accountant.
This is the case with so-called “Cash for Clubbers”. Many golf-cart dealers latched on to the idea of electric vehicle credits and have begun advertising this supposed tax loophole. There has been a recent flurry of rumors that the new LSV (Low Speed Vehicle) Credit applies to any electric vehicle that you could drive onto a local street without getting arrested on the spot. In many cases, dealers who are ignorant of the law have run advertisements stating that you can get a free golf cart because of this tax credit, but taxpayers are finding their attempts to actually get the credit denied in many cases.
In order to be eligible for the credit, vehicles have to meet several strict measures. They must be brand new, they must be designed specifically for over-the-road travel not just street-legal, and the manufacturer must have a letter from the government certifying that model is in fact a qualifying LSV. If the model you are looking at is manufactured primarily for off-road use (such as a golf-cart) it will not qualify.
If a dealer is trying to get you to purchase an electric vehicle, make sure you get the facts. The best thing you can do is get a copy of the letter to the manufacturer showing that model as a qualified vehicle. Also, beware of what they are promising as a credit. While the stated limits for this credit are $7,500 and $15,000 depending on the gross vehicle weight, the credit is calculated based on battery kilowatt capacity and could be as low as $2,500.
The best thing you can do, as with any to good to be true tax loophole, is do your research or talk to an expert who you trust.