First Time Homebuyer Credit

[JoshinNC]

Client owns his home and is getting married in June. Fiancee is not, and never has been a home owner. Can he sell her his house before the wedding and then they take the 1st Time Buyer Credit (or half the credit, since he has been a homeowner) on their joint return?

Just a thought.

[Mike Mac]

How about...

How about if, after they are married in June he put her name as a co-owner of the home on the title and also makes her equally liable for the mortage payments to the bank? Would that then qualify her as a first time home owner??

I had a client ask me this. At first blush, it has a ring of plausibility to it but I've been too busy with catching up to give much thought about the scenario.

Mike

[taxfun]

Another issue

Low income taxpayers own a mobile home which is situated on a rental lot. In Colorado, this unit is considered to be "personal property", not real estate- would they qualify for a new home buyer credit if they purchased a new home?

[Burke]

Low income taxpayers own a mobile home which is situated on a rental lot. In Colorado, this unit is considered to be "personal property", not real estate- would they qualify for a new home buyer credit if they purchased a new home?

If they owned a home which was their principal residence within the last 3 years, they would not qualify. It does not matter how it is taxed. The rule is principal residence, not real estate/personal property. States tax these differently.

[Burke]

Client owns his home and is getting married in June. Fiancee is not, and never has been a home owner. Can he sell her his house before the wedding and then they take the 1st Time Buyer Credit (or half the credit, since he has been a homeowner) on their joint return?

Might work if they don't get married. Can she afford to pay for home or qualify for mtge? With closing costs, etc, would it be worth it? If he sells to her for less than FMV, gift rules apply and would void her eligibility for the credit. And since he is not a first-time homebuyer within the meaning of Section 36, no portion of the credit may be allocated to him. (See TaxAuthority Update Bulletin dated 2/2/09, example #4.)

[Gretel]

If I remember right, then a married couple cannot take the credit as it stands right now, if one of the taxpayers owned a home before. Maybe it is different if they file separately but I doubt it.

[geekgirldany]

That is a situation I am looking into for a customer coming soon. Customer's filed MFS passed two years. Her name is on the mortgage for the house they have had for about 5 years I believe. They are getting a new house but putting it in his name only. So he is asking me about taking the credit.... I am not sure?

[tilt53]

Didn't I read something that said that they cannot have an "interest" in a previous home? If this is a community property state, isn't that "interest" implied?

[Gretel]

In my earlier post I indicated that married people can only claim the credit if neither the TP nor the spouse owned a home. I have this info from a seminar with Bob Jennings.

Below is part of the instructions for form 5405. I tend to agree that it must be the first home (within 3 years) for both of them and filing separate wouldn't change this.

From the instructions for form 5405:

Who Can Claim the Credit
In general, you can claim the credit if you are a first-time
homebuyer. You (and your spouse if married) are
considered a first-time homebuyer if:
c You purchased your main home located in the United
States after April 8, 2008, and before July 1, 2009.
You did not own any other main home during the
3-year period ending on the date of purchase.

[Burke]

If I remember right, then a married couple cannot take the credit as it stands right now, if one of the taxpayers owned a home before. Maybe it is different if they file separately but I doubt it.

The issue is whether they were married, not how they filed their taxes. So I do not believe that MFS makes them eligible.

[Burke]

That is a situation I am looking into for a customer coming soon. Customer's filed MFS passed two years. Her name is on the mortgage for the house they have had for about 5 years I believe. They are getting a new house but putting it in his name only. So he is asking me about taking the credit.... I am not sure?

Same answer as to Gretel, eligibility is based on ownership interest of the prior home, not how they filed their taxes.