First Time Home Buyer Credits

[NotEasy]

Mary has never owned a home and she bought a house as her primary residence in 2009. So she is a first time home buyer. She should be eligible for the First Time Home Buyer Tax Credit if she stays single in 2009. But then later in 2009, she got married. Her husband owns his primary residence so he is not a first time home buyer.

I think both the husband and wife has to quality in order to be eligible for the First Time Home Buyer Tax Credit. Does the marriage nullify the eligibility of Mary for the credit?

[solomon]

She qualifies. The purchase date is determinative - or occupancy date if TP has it constructed.

First-Time Homebuyer Credit: Scenarios


S1. If a single person (Taxpayer A) qualifies as a first-time homebuyer at the time he/she purchases a home with someone (Taxpayer B) that is not a first-time homebuyer and then later that year they marry each other, is the credit still allowed?

A. Eligibility for the first-time homebuyer credit is determined on the date of purchase. If Taxpayer A, a first-time homebuyer, buys a house and then later that year marries Taxpayer B, not a first-time homebuyer, the credit is allowable to Taxpayer A. Taxpayer A may take the maximum credit.

IRS Q & A - just following §36.

[Gretel]

Where did you find this information? I believe she doesn't qualify but will be happy to learn otherwise.

[AJsTax]

Where did you find this information? I believe she doesn't qualify but will be happy to learn otherwise.

I agree with Gretel on this. I thought they would have to wait until after the end of the tax year to get married in order for her to be eligible. That is one of the examples I have read somewhere. Not sure where at this point.

Correction: after further study, a taxpayer can qualify for the credit and get married later. The important date is the date of closing or in the case of building, moving in. The deal must be completed and the home must be the primary residence for her before they get married. his name can still be on the deed, etc. Now the question is, must she amend 2008 to claim the credit or will they allow it on the joint 2009 return and how would you prove it??
A compliance headache !!!

[jimmcg]

I agree with Gretel on this. I thought they would have to wait until after the end of the tax year to get married in order for her to be eligible. That is one of the examples I have read somewhere. Not sure where at this point.

Go to irs.gov, type first time homebuyer credit in search box, then click on first time homebuyer scenarios and read.

[AJsTax]

I was typing as each of you were adding yours .
This scenario will be impossible to police and create a terrible problem.
But that is what happens when congress tries to do something good!!!

[OtisMozzetti]

Where now will Mary live?

Mary has never owned a home and she bought a house as her primary residence in 2009. So she is a first time home buyer. She should be eligible for the First Time Home Buyer Tax Credit if she stays single in 2009. But then later in 2009, she got married. Her husband owns his primary residence so he is not a first time home buyer.

I think both the husband and wife has to quality in order to be eligible for the First Time Home Buyer Tax Credit. Does the marriage nullify the eligibility of Mary for the credit?

Please remember that the first-time homebuyer must keep the newly bought home as that person's main home for 36 months after the purchase, or else pay back the up to $8000. Where will Mary live, as her "main" home, now that she later got married?

Also, think back to the "unforeseen circumstances" exceptions to the 2-year holding period rule on the exclusion of gain on a main home. Are there going to be any similar such exceptions to the 36-month use of main home rule on the homebuyer credit? I would imagine that dying would probably past muster as an exception. What about "unforeseen" job transfer? What about "unforeseen", or foreseen, marriage later during the year that the home was purchased?

What if triplets are born several months, or 10 months, after the home has been purchased?

[OtisMozzetti]

How does the income phaseout apply?

For a 2009 purchase, the credit may be claimed on the 2008 return or on the 2009 return. It would seem that the income limitation, or phaseout, must be satisfied on only whichever of those two tax returns on which the credit is claimed?

[jimmcg]

For a 2009 purchase, the credit may be claimed on the 2008 return or on the 2009 return. It would seem that the income limitation, or phaseout, must be satisfied on only whichever of those two tax returns on which the credit is claimed?

You got it! Use whichever year provides the greater benefit.

[solomon]

What if the Second Coming occurs.

[OtisMozzetti]

a legitimate question

What if the Second Coming occurs.

Solomon, I for one appreciate your most valuable contributions to this board insofar as tax law and regulations. I do think that it is a pertinent question whether or not the three year main home requirement, for the first-time homebuyer credit, is going to have exceptions.

[Gretel]

Solomons question is legitimate too. I didn't read it as diminishing anything else that was posted.

[JohnH]

Interesting new development over on the ATX Unofficial Community. A preparer had a client come in with an inquiry - IRS is asking for proof of purchase of the residence for which the credit was claimed on the 2008 return IRS wants proof of purchase in the form of copies of dated and signed closing papers; including notarized tax transfer statements.

I think this is an excellent development - maybe it will head off some fraud & abuse of the credit if they send out enough of these letter audits. Anyhow, at least it's an indication of what type of info it would be good to retain in order to back up and document the deduction.

[1040notEZ]

I have also read that all FTHB credit returns must be paper filed and it will take a minimum of 2 to 3 months to receive a refund. The only other option is to e-file without the credit and then admend the return later to get the credit.

[BP.]

I would imagine that dying would probably past muster as an exception.

It is already one of the exceptions to the repayment rule. See p. 3 of the 5405 instructions.

http://www.irs.gov/pub/irs-pdf/i5405.pdf