Can You Refinance a Hybrid and Still Receive the Tax Credit?

The Energy Policy Act of 2005 established a taxpayer credit for certain fuel-efficient vehicles such as hybrid cars that were purchased or put into service between January 1, 2006 and December 31, 2010. To qualify for the credit, you must be the original purchaser of a qualifying vehicle, and you must have purchased the vehicle for your use from 2006 to 2010. In addition to these, there are several other requirements.

Manufacturer's Certification

A certain vehicle make and model is eligible for the tax credit only if fewer than 60,000 cars were sold or if less than two calendar quarters passed since 60,000 cars were sold. Check with the auto manufacturer and obtain a certification that the vehicle you purchased qualifies for the tax credit to begin with, then meets these stipulations regarding sales numbers.

Date Requirement

To qualify for the tax credit, the vehicle must have been placed in service on or after January 1, 2006 and purchased prior to January 1, 2011. If the car was not purchased and put into service during these dates, it is not eligible for the tax credit, regardless of whether it fulfills other eligibility requirements.

Ownership Requirement

The taxpayer claiming the credit must be the original purchaser of the vehicle. Even if you refinance, as long as you are the original purchaser and you meet the other eligibility requirements, you qualify for the tax credit. The credit, however, does not apply to the purchase of a used hybrid car.

Purpose and Use Requirement

The vehicle must be purchased for use by the taxpayer claiming the credit. It must be placed into service and used primarily in the United States.

Assigning the Tax Credit

If you leased, rather than purchased, a qualifying vehicle, the leasing company is eligible to claim the credit, but can optionally pass it along to you as the lessee. If you are tax-exempt and purchased a qualifying vehicle, the seller can take the tax credit as long as the amount of the credit is clearly disclosed to you as a tax-exempt purchaser.