First time home buyer credit for foreign national

[NotEasy]

Does a foreign national who buys a house in the US in 2009 qualify for the first time home buyer credit?

They have never owned a home in the US. But they do own a home outside of US in their home country within the last three years. Do they still qualify as a first time home buyer in the US for the credit?

[BP.]

But they do own a home outside of US in their home country within the last three years.

Home ownership itself isn't necessarily disqualifying, just ownership of their primary residence. Was foreign home considered their primary residence?

[NotEasy]

Home ownership itself isn't necessarily disqualifying, just ownership of their primary residence. Was foreign home considered their primary residence?

Thank you for your reply.

I didn't ask them. But let's say yes it is their primary residence in their home country. Would that mean they will not qualify for the first time home buyer credit in the US?

[Koss]

Main Home

From the instructions for Form 5405:

You (and your spouse if married) are considered a first-time homebuyer if:

- You purchased your main home located in the US after April 8, 2008, and before July 1, 2009, and

- You did not own any other main home during the 3-year period ending on the date of purchase.

Your main home is the one you live in most of the time. It can be a house, houseboat, housetrailer, cooperative apartment, condominium, or other type of residence.

<snip>

You cannot claim the credit if any of the following apply:

1. Your MAGI is $95,000 or more <snip>

2. <snip>

3. <snip>

4. You are nonresident alien.

5. <snip>

In order to qualify for the credit, the home that is purchased must be in the USA. But ownership of a main home within the last three years will disqualify the buyer, even if the main home they owned was outside the USA.

A nonresident alien cannot claim the credit. However, many nonresident aliens are considered resident aliens for tax purposes. So some nonresident aliens may in fact be eligible to claim the credit. This includes nonresident aliens who are married to a resident alien or a US citizen, and other situations as well.

BMK

[Gretel]

Burton, whatever you have said in the past was like to Bible to me. However, I have to respectfully disagree with part of this post. It is my understanding that, as long as you have not owned a home in USA, you qualify for this credit as resident or citizen.

[Koss]

Definition

You may be right... I'll have to look at this more carefully. I'm trying to read the text of the IRC 36 right now, and I'm getting a massive headache...

BMK

[Gretel]

Hope the pain will go away soon. It's awful. Mine just got better this morning after effecting me very badly yesterday.

[BP.]

as long as you have not owned a home in USA, you qualify for this credit as resident or citizen.

Gretel, even if foreign home is main home? Thanks for clarifying.

[Gretel]

This is from the IRS instructions. Note how it says "qualified home". This indicates for me that only a home in the US counts for both, "main home" and being able to take the credit.

First-Time Homebuyer

A "first-time homebuyer" is any individual (and spouse if married) who had no present ownership interest in a qualifying principal residence during the 3-year period ending on the date of purchase of the principal residence for which a first-time homebuyer credit is being claimed.

[BP.]

This is from the IRS instructions. Note how it says "qualified home". This indicates for me that only a home in the US counts for both, "main home" and being able to take the credit.

First-Time Homebuyer

A "first-time homebuyer" is any individual (and spouse if married) who had no present ownership interest in a qualifying principal residence during the 3-year period ending on the date of purchase of the principal residence for which a first-time homebuyer credit is being claimed.

Gretel, thanks for your reply. Please don't think I am trying to be picky, just seeking to understand some of the permutations of this interesting credit, as I've already had several clients eligible for the $7,500 credit/loan, and anticipate more will be taking the $8,000 credit.

I notice your quote is from a Tax Topic, not the form instructions. The quote mentions "qualifying principal residence" not "qualified home."

I'm referring to the actual Form 5405 instructions here:
"You are considered a first time home buyer if:
You purchased your main home located in the United States after April 8, 2008, and before December 1, 2009.
You (and your spouse if married) did not own any other main home during the 3-year period ending on the date of purchase."

Based on my reading of this passage of the instructions on the form, and the stipluation that the new home must be in the US, with no such stipulation attached to the location of the previously owned main home, (just says "any other") this indicates to me that any main home ownership in the 3 year look back period would be disqualifying.

I can see the differing viewpoints, however, based on the interpretation of the term "qualifying" in the phrase "qualifying principal residence."

I think I for one am clearly not ready to discard discussion of the FTHB credit any time soon!
Cheers!
Barb

[Gretel]

Thanks, Barb. I am not ready either. Let's wait for our master Koss. Once his headaches are gone I am sure he will come up with something. I am very bad at reading and understanding the actual code.