First Time Homebuyer Credit

[KarenV]

Does anyone know if this credit applies to a home purchasd on a land contract? We've had no luck trying to get an answer from the IRS.

[TaxLadyinPA]

Do they have the deed?

I would like to add a bit more to your question because I have this on the seller end of a land contract.

First if it is a relative the answer is NO it does not qualify.

But if not a relative … here is the question. …….

Did they actually change the deed to the new owner…. ( I find that most land contracts they don't)

I ask because my seller is holding the mortgage but they have NOT turned over the deed to the buyer. The buyer has 3 years to obtain a mortgage from a bank or the seller can boot them out. Which brings questions that has nothing to do with yours and I will ask in another thread.

But my point to you is ….. if they didn't turn over the deed then there is NO first time home buyer …

If they did turn over the deed to the buyer … then I would say yes … they are a buyer …. It would make no difference whether the seller is the mortgage holder or a bank or a mortgage company holds the mortgage …. ….

[jimmcg]

Does anyone know if this credit applies to a home purchasd on a land contract? We've had no luck trying to get an answer from the IRS.

As I recall this question was asked on the IRS monthly webcast not too long ago and the answer was yes. It was said at the time that the Service's "interpretation" was that a land contract was simply another form of financing. What matters generally is that the purchaser takes possession and assumes all the rights and obligations of ownership. The fact that the deed is not transferred until the final payment is made is secondary to the actual facts and circumstances of the case. So if questioned each case will have to stand on it's own merits. I am sure the Service will come out with official Regs on this subject but perhaps not in our lifetime.

[taxmom34]

land contract

i don't know the definition of a land contract, but does it say somewhere if there is a home on that piece of land. ? just looking at the term, it sounds like they are just buying the land. maybe someone can educate me

[jimmcg]

i don't know the definition of a land contract, but does it say somewhere if there is a home on that piece of land. ? just looking at the term, it sounds like they are just buying the land. maybe someone can educate me

First thing you need to do is get the land contract and read it. It should contain a legal description of the property involved. Then if there is a home involved see if all the requirements of Code Sec 36 are met.

[TaxLadyinPA]

No home buyer credit from me

What matters generally is that the purchaser takes possession and assumes all the rights and obligations of ownership. The fact that the deed is not transferred until the final payment is made is secondary to the actual facts and circumstances of the case. .

I guess I understand what you are saying ….. but I have to say that I am glad in my instance I'm dealing with the seller not the buyer because there is NO way that I would give the home buyer credit to someone who basically has a *rent to own* contract. This house no way belongs to the buyer in my case.
If financing is obtained thru a bank or mortgage company the deed and real estate taxes are all turned over to the buyer. It states that if they obtain a bank loan then they can purchase the home and credit will be given for the amounts paid prior. I would turn the buyer away and tell them to go elsewhere to have their return prepared before I would allow the home buyer credit. What is there to stop a *rent to own* buyer from obtaining the home buyer money, then just walk away after the alotted stipulations of time are followed. I would think that all renters in the country could have a contract drawn up claiming that they are counting the rent paid as a land contract *rent to own* .. strike a private deal with the rental owner... (we'll split the 8000). They will continue to pay the rent as always and there is no real intent to ever sell to them. But they both made a nice $ 4000 a piece because they made a contract that said they were buying the house.

For me .... No actual property transfer to the new owner ... no first time home buyer credit. Maybe I am wrong .. but this is my story and I'm sticking to it !!!

I don't know the circumstances of the original posters land contract but I still would not allow this credit if there was no actual property transfer to them.

TO: Taxmom34 - a land contract is just the name given ….. I'm sure there is a house involved. If there isn't then you are so right … there is no home buyer credit.

[keglerjg]

Land Contracts qualify

Buyer is "Vendee" and acquires "equitable title" and is property owner with all rights and privileges of ownership, even though deed doesnt pass until payoff. So if not a relative buyer qualifies for tax credit.

[OtisMozzetti]

Installment purchase of a new vehicle

It seems to me that an "installment purchase" (a buyer buys a new vehicle via an installment sale from the vehicle seller) of a new vehicle qualifies for the ARRA deduction of sales tax on a new vehicle. It doesn't matter that payments have to be made after 2009 on the new car, truck, motorcycle, or RV.
So, would an installment purchase of a main home where some of the payments are made in a later year come under the same principle?

[Lion]

My take

My take is that how you finance the new home does not matter, but you DO have to occupy it as your main residence by 1 December 2009. After all, if you have a mortgage, you'll be making payments for many years to come.