First Time Home Buyer Credit

[tonia2021]

Client is engaged(soon to be wife). The couple is planning on buying the fiancee's (soon to be husband) parent's home. Neither has owned a house.

Is there any way that they could qualify for the first time home buyer credit?

What if they buy it together, but purchase it before she is married? Could she qualify for the credit?

Could this work if they file MFJ or MFS? Or, should they wait and get married after January 1st?

[solomon]

A parent is considered a related party. She could purchase it and then get married after the closing. It is not necessary to wait until next year for the marriage because the purchase date is determinative. The full credit would then be available.

[dsi]

He should buy it this year, and wait until 2010 to gt married.

[ChEAr$]

Iow

He should buy it this year, and wait until 2010 to gt married.

"living in sin for fun and profit."
and tax savings.

[OtisMozzetti]

joint ownership of house

...What if they buy it together, but purchase it before she is married? Could she qualify for the credit?
...

I am not sure about the issue of subsequently getting married, but it is in the instructions that if two individuals buy one house as joint owners, then they have to share one $8000 credit, assuming that they otherwise quality.

[Jesse]

In sharing the credit however, one could take the entire 10% or $8,000(whichever is less). So the split could be Him - disqualified fiancee (because a related party) $0/ Her -qualified $8,000. The following link has some examples of allocation of Section 36 First-Time Homebuyer Credit Between Taxpayers who are not married:

http://www.irs.gov/pub/irs-drop/n-09-12.pdf

Also remember it would need to be purchase BEFORE 12/01/2009.

[Gretel]

Just got this from NSA, interesting that they don't consider in-laws as relatives.

IRS Explanations on First Time Home Buyers Credit
NSA submitted two questions on the application of the First Time Home Buyers Credit to the IRS. The NSA questions and the IRS responses are below. The IRS responses are follow:

1. You cannot buy a home from a related party and qualify for the credit, but what happens if it is a married couple. If they are buying the house from the husband's father, then the seller is not a related party to the wife. Can she take the credit?
Yes. In general, to qualify for the first-time homebuyer credit, a taxpayer cannot acquire the residence by gift, but rather must purchase the residence in a bona fide sale. A taxpayer also cannot acquire the residence from a related person. An in-law is not considered a related party for purposes of the credit. Therefore a taxpayer who purchases a home from an in-law can claim the first-time homebuyer credit. The wife is entitled to the full credit based on 10% of the total purchase price, up to $8,000 if the taxpayers file a joint return. If the wife files a separate, the maximum amount of her credit is $4,000.