The snow-covered house and “happy holidays” greeting made the card look festive. But words inside revealed it as something besides a heartfelt holiday greeting.
The dealership that sold me my car wants me to bring it in, sell it back for 110 percent of its published used car value and buy a new vehicle.
The deal sweetener: a promise to keep my payments on the new car the same as what I’m paying now.
The gimmick — a $10 gift card at a discount retail store just for coming to the dealership to claim the prize.
It’s just one of the many car shopping come-ons consumers will get during these last two weeks of 2009.
Pitches will come fast and furious as dealers tie their desire to clear their lots of older inventory with a tax incentive that will disappear soon.
State and local sales and excise taxes on new vehicle purchases between last Feb. 16 and New Year’s Day 2010 are deductible on 2009 federal income taxes. It’s a tax break courtesy of the stimulus package Congress approved in January.
Buyers can write off the taxes paid on the first $49,500 spent for a new car, light truck, motorcycle or motor home.
Federal taxpayers typically can deduct state income tax or sales tax, but not both. The vehicle sales tax break, however, is available to taxpayers who also deduct state income tax.
That’s no help in Texas, since we don’t have a state income tax anyway.
But what does still benefit Texas car buyers is that the vehicle write-off is available even to taxpayers who don’t itemize other deductions.
Taking the standard deduction, and filing Schedule L with their tax returns, will let taxpayers increase the deduction by the allowable amount of the taxes paid on the new vehicle.
The deduction phases out beginning at modified adjusted gross incomes of $125,000 for individuals and $250,000 for joint filers, ending altogether at $135,000 for individuals and $260,000 for joint filers.
Reducing a tax bill by a few hundred dollars is way more exciting than a two-digit gift card.
But if you are not a careful shopper, you could wind up signing over the tax savings to a dealership by paying too much for a car.
Don’t go to the dealership until you have researched the invoice price, rebates and dealer incentives for the vehicle you want to buy. Compare that data to at least three similar models.
And get pre-qualified for a car loan by your bank or credit union. That will give you a comparison you can use to assess whatever financing the dealership offers.
If you are planning to trade in the vehicle you’re driving now, clean it up meticulously to get the best price for it.
Then, in your spotless car, drive to the dealership and, with your research in hand, walk around the lot until you find what you want and make an offer.
When working with a salesperson, keep the conversation focused on the purchase price. There will be time later to discuss the value of the vehicle you are trading in and the financing arrangement the dealership can offer you.
If you do your homework and avoid impulsive moves, a new car in the new year can keep you glowing after the holiday lights are gone — especially on April 15 when you take that tax deduction.