Fthc

[Lion]

With apologies to those of you who also read the unofficial ATX Board:

My son is considering buying his girlfriend's house to get the FTHC. (He owns some commercial land that girlfriend wants to build a bakery on, so they each have a good reason to make these sales and purchases.) When girlfriend bought the house, the realtor said she did not qualify for FTHC due to the doublewide having no foundation. She bought the house about 2005, so it would not have been the federal FTHC the realtor was referring to but might've been a local or PA incentive. She has been paying real estate taxes on her home (is going to confirm that it's not personal property tax). It's been solely owned by her and insured and resided in since December 2005 or so. Son has lived with her but has no ownership interest; rented in Philly prior to moving to Lakewood and never owned a home. He purchased raw land in Hancock, NY, a year or so ago but hasn't been able to afford building on it. Girlfriend wants to buy it to build a bakery (she's a chef). She could buy his land if she can sell her house. If he buys her house and gets the credit, they'll have money again after paying all those closing costs and he'll still be a landowner and they'll still be able to live in the house they've been fixing up. Everybody seems to get what they want IF he can get the FTHC on a doublewide without a foundation. Anybody know for sure?

[Bees Knees]

Sometimes too much information confuses the issue.

The basic rule is the person buying the house cannot have had an ownership interest in his principal residence during the 3-year period prior to the purchase date of the house.

Living in his girlfriend's house is not an ownership interest in his principal residence.
Renting a house is not an ownership interest in his principal residence.
Owning vacant land is not an ownership interest in his principal residence.
Running a bakery is not an ownership interest in his principal residence.
Having a foundation or lack of a foundation has nothing to do with the question of whether or not he has an ownership interest in his principal residence.

The key is: Did he at anytime during the last 3 years have an ownership interest in his principal residence. If no, then the credit applies.

[Lion]

Too much

I apologize for giving too much information. The girlfriend wrote me a rambling e-mail, and I didn't edit well enough.

I'm looking for the definition of a house/home/residence. Can a doublewide withOUT a foundation be a home for purposes of the FTHC. Or, because it was moved to the location instead of being built and not affixed to a foundation, is it a vehicle or personal property or something other than a home?

Everything else is satisfied, which was why I left in all that other information.

[AuditorTurnedGood]

I think the requirements

are the same as those for the mortgage interest deduction:

Cooking facilities
Bathroom (or equivilant)
Sleeping quarters.

I'm pretty sure if your son wanted to, he could buy a big boat and take the credit.

[dsi]

A boat, RV, probably even a tent could qualify.

[Lion]

Great

Great. It certainly has a big eat-in kitchen, three full bedrooms and two full baths. So, he's good to go. I still want to find the law to have it in front of me. Thanks, everyone.

[dsi]

I'm certain you'll find it in TTB.

[solomon]

I still want to find the law to have it in front of me.

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

§36(c)(2) PRINCIPAL RESIDENCE. --
The term "principal residence" has the same meaning as when used in section 121.

§1.121-1(b)

Residence —(1) In general. Whether property is used by the taxpayer as the taxpayer's residence depends upon all the facts and circumstances. A property used by the taxpayer as the taxpayer's residence may include a houseboat, a house trailer, or the house or apartment that the taxpayer is entitled to occupy as a tenant-stockholder in a cooperative housing corporation (as those terms are defined in section 216(b)(1) and (2)). Property used by the taxpayer as the taxpayer's residence does not include personal property that is not a fixture under local law.

[newbie]

.................
§1.121-1(b)
Quote:
Residence —(1) In general. Whether property is used by the taxpayer as the taxpayer's residence depends upon all the facts and circumstances. A property used by the taxpayer as the taxpayer's residence may include a houseboat, a house trailer, or the house or apartment that the taxpayer is entitled to occupy as a tenant-stockholder in a cooperative housing corporation (as those terms are defined in section 216(b)(1) and (2)). Property used by the taxpayer as the taxpayer's residence does not include personal property that is not a fixture under local law.

>>Property used by the taxpayer as the taxpayer's residence does not include personal property that is not a fixture under local law.<<

What exactly does that last sentence mean?

[solomon]

>>Property used by the taxpayer as the taxpayer's residence does not include personal property that is not a fixture under local law.<<

What exactly does that last sentence mean?

Exactly what it says. Whatever the local law of a jurisdiction says about not being a fixture. Obviously, this includes a tent not being a fixture that was in a previous post.

[newbie]

Forgive my ignorance, but how would you determine this? I mean if a mobile home set up in a mobile home park is not meant to be a temporary campsite, and it is subject to personal property tax, not real estate tax does this make is a "fixture" versus real estate? But if it is on land owned it is subject real estate taxes it is a "home".

What about a houseboat that is not subject to real estate taxes, how or where would you look to determine if it is a "fixture" or a home?

[solomon]

Forgive my ignorance, but how would you determine this? I mean if a mobile home set up in a mobile home park is not meant to be a temporary campsite, and it is subject to personal property tax, not real estate tax does this make is a "fixture" versus real estate? But if it is on land owned it is subject real estate taxes it is a "home".

What about a houseboat that is not subject to real estate taxes, how or where would you look to determine if it is a "fixture" or a home?

Again, what the Regulation says, namely, check with the particular local jurisdiction. However, if you are looking for some hints as to what is personal property in this context (interest) in the Regulations, see the following § 1.163-10T(p)(3)(ii):

Definition of residence. Whether property is a residence shall be determined based on all the facts and circumstances, including the good faith of the taxpayer. A residence generally includes a house, condominium, mobile home, boat, or house trailer, that contains sleeping space and toilet and cooking facilities. A residence does not include personal property, such as furniture or a television, that, in accordance with the applicable local law, is not a fixture.

More insight is given regarding an exclusion item for interest for AMT in §56(e).

The term “qualified dwelling” means any—
(A) house,
(B) apartment,
(C) condominium, or
(D) mobile home not used on a transient basis (within the meaning of section 7701 (a)(19)(C)(v)),

Note "(D)" and a mobile home not used on a transient basis.

[newbie]

Thanks for the guidance!

[dsi]

Solomon, ok, please explain your response about a tent not qualifying. I admit, I was just rambling about a tent qualifying, but no where can I see it not qualifying. It is not personal property...now that I think about it, it could qualify if it contains a bathroom and a place to cook.

[Bees Knees]

Solomon, ok, please explain your response about a tent not qualifying. I admit, I was just rambling about a tent qualifying, but no where can I see it not qualifying. It is not personal property...now that I think about it, it could qualify if it contains a bathroom and a place to cook.

Notice the reference to

mobile home not used on a transient basis

.

In other words, using your RV to go camping with does not qualify as a residence. Parking it year round in an RV park does.

The same would be true for a tent. If you use it on a transient basis, it’s not a residence. If it is set up on a permanent basis in a location that under local law allows it to be used as a home, then it might qualify as a residence. (assuming it has cooking and toilet facilities...)