First Time Home Buyer's Credit

[jmb]

I have a client who owned a home used as her principal residence in Washington State.
She moved to Minnesota over 3 years ago but was unable to sell her residence for a period of time after she moved. Since it has not been 3 years since she sold her home, but has been more than 3 years since she used this home as her principal residence, if she purchases a home, will she be eligible for the first time home buyer's credit?

[solomon]

.................

36(c)(1) FIRST-TIME HOMEBUYER. --
The term "first-time homebuyer" means any individual if such individual (and if married, such individual's spouse) had no present ownership interest in a principal residence during the 3-year period ending on the date of the purchase of the principal residence to which this section applies.

[Matt Sova]

That is a good question

I have read examples where someone owned a rental property and still qualified because that was not their principal residence. If she has not lived there in over 3 years is it still her principal residence?

Well, for the gain exclusion it is not because she has not occupied it 2 of the last 5 years. Also, from what I can gather from what I have read on the IRS website (you may want to read up on this yourself) I would say that she does. She did not OWN her principal residence in the last 3 years.

CYA - get a signed statement from the client acknowleding these facts. No preparer needs a penalty of up to $250k and up to 3 yrs in prison for filing a fraudulent return. Also, review all the information on the IRS website and keep copies of that info in the file.

[JohnH]

In my opinion, this client is another candidate to give the phone# and addesss of the local HRB office.

[jmb]

First Time Home Buyer's Credit

HRB has already told her she qualifies, since she can prove she moved out of the house. I also read an example of someone who had not lived in their personal residence for over 3 years however they still owned the property, but it was in New Orleans and was uninhabitable and unsaleable. The general consensus was that this individual "might qualify" I however, can not find anything to assure me that they will qualify. Only MIGHT!

[solomon]

HRB has already told her she qualifies, since she can prove she moved out of the house. I also read an example of someone who had not lived in their personal residence for over 3 years however they still owned the property, but it was in New Orleans and was uninhabitable and unsaleable. The general consensus was that this individual "might qualify" I however, can not find anything to assure me that they will qualify. Only MIGHT!

The law is explicit.

[Bees Knees]

Here is the law:

A taxpayer is considered a first-time homebuyer if such individual had no ownership
interest in a principal residence in the United States during the 3-year period prior to the
purchase of the home to which the credit applies.

Here is what you ask:

Q: Where was your principal residence for the past three years?

A: 123 main street, anytown, U.S.A.

Q: Did you own 123 main street, anytown, U.S.A. at anytime during the past three years?

A: No. I was a renter during that time period.

Conclusion: You are a first-time homebuyer, according to the law. Any other property owned during that time period for any reason (other than as a principal residence) is irrelevant.

Note: There can only be one principal residence at any one time. A second residence is a second home, not a principal residence.

[Gretel]

Wow, bravo!