Senate approves tax break for auto loan interest

Stijloor

Leader
Super Moderator
#1
Automotive News
February 3, 2009 - 6:00 pm ET

WASHINGTON -- The U.S. Senate voted today to make loan interest and sales taxes on vehicle purchases deductible from federal income taxes.

The proposal, championed by the National Automobile Dealers Association, was added to an economic stimulus bill under debate in the Senate. The vote was 71-26.

The provision was not in a House-passed version of the more than $800 billion package of spending increases and tax cuts.

A conference committee will decide whether the provision stays in. The bill is a top priority of President Barack Obama.

If the measure passes, taxes on auto loans will be deductible for the first time since 1986.

The provision on deductibility of loan interest is the first significant measure aimed at getting consumers back into showrooms and buying vehicles to get action from Congress. NADA says the measure will save consumers about $1,500 on a $25,000 vehicle.

Some experts have criticized the provision for not having enough up-front punch. Too many worried would-be buyers aren't thinking ahead to cutting future tax bills, they argue.

But the measure is a significant incentive and NADA had to focus on what could be accomplished politically, an organization spokesman said today.
 
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howste

Thaumaturge
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#2
A home equity loan used to buy a car has been tax deductable for years. This would be a good tax incentive for those who are renting or have no equity in their homes though.
 

Marc

Fully vaccinated are you?
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#5
A home equity loan used to buy a car has been tax deductable for years. This would be a good tax incentive for those who are renting or have no equity in their homes though.
A friend of mine couldn't afford a car he bought (have you heard this story before?) which I ended up buying from him about a year ago. I thought of a home equity loan for the tax deduction aspect. But who want's a lien on their home for a tax deduction to buy a car? What a risk factor! I took out a regular car loan, paid it off 3 months later and that was it.

What I do believe in all this is that there are so many people who have been put into shock over the last year that a tax deduction isn't worth a snit if you really can't afford a new car (and I bet that's what the tax deduction will apply to - NEW car purchase loans). I had over 175,000 miles on my old Bonneville (my lady friend bought it from me and is enjoying, especially in the snow we're having because it's REALLY good in snow) and I really only bought the 2004 Bonneville because I thought I would be traveling...

I've bought used cars for years. I've had relatively good luck. My bet is the incentive will be like that of 'easing' home mortgages - People can't afford what they could and are re-examining their spending. Easing mortgage terms, interest rates and such won't help when more and more people aren't sure if they'll even have a job 3 to 6 months from now.

I may post a poll on this. Interesting topic.
 

bobdoering

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#6
My bet is the incentive will be like that of 'easing' home mortgages - People can't afford what they could and are re-examining their spending. Easing mortgage terms, interest rates and such won't help when more and more people aren't sure if they'll even have a job 3 to 6 months from now.
It will help. If you had two incomes, but suddenly have one, a more beneficial home loan situation may make the difference between keeping it or walking away from it. A lot of people talk about folks that bought homes they can't afford. We could afford a house before...but the drop of values torched the equity, making refinance nearly impossible. Add to that a loss of an income...what was once no problem becomes a compounded problem. :(
 

CarolX

Trusted Information Resource
#7
I will take all the tax breaks I can get...but in the end, I just want my husband to find work.

Today was a blessing - after 9 months of unemployment - he got a call yesterday and started back to work today. He is a carpenter (commercial work is his thing) and with the housing bust and the economy as it is - not much construction happening.

We have worked hard to tighten everywhere we could so we could make it on my income alone in case his unemployment ran out before he found work. But there are a lot of folks out there that need 2 incomes to meet their expenses.

So the pols can talk all they want about tax breaks - does us no good if there are no jobs.
 

Marc

Fully vaccinated are you?
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#8
But there are a lot of folks out there that need 2 incomes to meet their expenses.
My bet is this is the situation the majority of people are in. And I doubt many people will buy a car just for the tax break.

Glad to hear your situation has picked up, Carol!
 

Stijloor

Leader
Super Moderator
#9
Friends,

I guess we'll have to wait what the final stimulus package will look like.

Every little bit helps.

:topic:

You may have heard today on the talk shows that the biggest challenge for our new government will be to get the health care costs in control... But that's a subject for another thread.

Stijloor.
 

Randy

Super Moderator
#10
Friends,

I guess we'll have to wait what the final stimulus package will look like.

Every little bit helps.

:topic:

You may have heard today on the talk shows that the biggest challenge for our new government will be to get the health care costs in control... But that's a subject for another thread.

Stijloor.

Yeah, but I'll guarantee there is some salt mixed in with the sugar;)
 
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