First Time Home Buyer

[RZellers]

Scenario:

Client got married in March of 2009. She will of course file as single for 2008. She never previously owned a principal residence (or any other house for that matter). Upon getting married, her groom converted his principal residence into a rental property and they bought a new home together.

As she files a return as single by herself for 2008, it feels like she should be eligible for the first time home buyers credit... or at the very least, half of the credit. The instructions for the form indicate that if 2 unmarried people buy a first time home together, they can split the credit in any reasonable manner... which I assume could mean 100% for one, and 0% for the other... even if the 0% person didn't qualify anyway? I know these 2 were not unmarried when they bought the home, but does/should the simple act of marriage disqualify her from the credit? The purchase price of the home was $226K, so even if we attributed half the price to her, she would still seem to qualify for full credit.

The IRS's site seems to yield very little detail about the credit, presumably because of it's newness. We called the IRS, spoke to 4 different people, and got 2 yes's & 2 no's... what fun.

Any thoughts from the real experts??

[solomon]

If either spouse owned a principal residence in the previous three years (he did), then both are disqualified to apply for the credit.

From Notice 2009-12:

Section 36(c)(1) defines “first-time homebuyer” as any individual (and if married, the individual’s spouse) who has not had an ownership interest in any principal residence during the three-year period ending on the date of the purchase of the principal residence.

[David1980]

Now had they bought in her name prior to the marriage they may have gotten it all. Tax planning 'n stuff... Of course it seems like they never plan, they just do and hand the preparer the mess.