BREAKING: BMW Finally Increases i3 Lease Credit To Industry Norm Of $7,500
When the BMW i3 hit the U.S. market, BMW curiously made available only $4,875 of the $7,500 Federal EV Tax Credit to those who leased an i3 – saying that was all that was available to them via some unheard of before, business tax code clause.
This raised a lot of questions, especially since Nissan and Chevrolet had long been offering the full amount of the tax credit ($7,500) to those who leased the LEAF or Volt.
We never did fully figure out why BMW offered the reduced rate, but now that $4,875 lease credit has somehow miraculously changed to the full $7,500 for 2015 BMW i3s.
As a BMW dealer in Arizona has informed us:
The lease credit for the 2015 i3 has been raised from$4,875 to $7,500.
The problem is that those who initially purchased an i3 often opted for BMW’s more complicated/pricey OwnersChoice with Flex option (which is basically a term financing product with a balloon payment at the end in order to simulate a lease) to get the full credit. Lots of those owners now feel as though BMW screwed them over.
On the plus side, for new buyers looking to lease a BMW i3, this development is certainly welcome news.
Just for fun, we thought why not revisit what BMW told us in the past regarding the lease credit. Over a year ago, InsideEVs Tom Moloughney reached out to Timm Bock, Product Development & Pricing Manager for BMW Financial Services. Here’s Bock’s email response in its entirety:
Please see my response below regarding the Lease and OwnerChoice products you had asked about, as well as how each product relates to the Federal EV Tax Credit when purchasing a BMW i3.
Traditional Lease – Our tax team has advised us that each leased BMW i3 qualifies us for a Federal EV Tax Credit of $4,875 – all of which is passed on to the consumer. This $4,875 Lease Credit can be directly applied as a Capitalized Cost Reduction, or to other costs, at the time of lease-signing. Regardless of your tax situation, by choosing a BMW FS lease with the $4,875 Lease Credit, you’ll know exactly how much you will benefit, it’s applied at the time of purchase and there is no subsequent filing, administration or personal tax implications.
(As a reminder, only EVs purchased for personal use are eligible for the maximum $7,500 tax credit. However, the benefit is reduced to $4,875 for 100% business use. Regarding Nissan and Chevy, we can’t speak to why they are choosing to offer $7,500 or more; this may be part of the their incentive or discount strategy.)
But for customers who want to claim the maximum tax credits, we have made attractive alternatives to leasing available: OwnersChoice and OwnersChoice with Flex.
· OwnersChoice – OwnersChoice provides: low lease-like monthly payments, the lease-like option to return the car at the end of the term AND the eligibility for you to claim the maximum income tax credits.
· OwnersChoice with Flex – In addition to the OwnersChoice benefits above, OwnersChoice with Flex allows you to increase your final balloon payment due at the end of the contract term by up to $7,500. Increasing the final balloon payment due further reduces your monthly payments, and in this way provides you with the opportunity to benefit from the $7,500 immediately. OwnersChoice with Flex bridges the time-gap between the vehicle’s purchase date and your tax filing date. We are proud to say that BMW FS is the first in the industry to develop an enhanced balloon finance solution like this for EVs.
BMW Financial Services will also offer our traditional loan product. Like both of the OwnersChoice products above, a BMW FS loan provides you the eligibility to claim the maximum $7,500 Federal EV Income Tax Credit.
In general, due to the uncertainty and complexity of tax credit rules, we encourage anyone considering an EV to consult with a tax professional.