First time Home Buyer Credit

[Questionguy101]

Facts that your client told you:

(1) He bought a house in another city in 2009.

(2) He has never owned a property before.

(3) The house was bought in November 2009 but he still has not moved in. He just went there during the weekend.

(4) The reason is that he is waiting for his company to transfer him to the regional office in that area. Once he gets transferred, he will move in to make it his main home. But he doesn't know when.

(5) He swears the property was bought with the intention to become his main home.

What would you do? Would you go ahead to file for the FTHB credits for him?

[BP.]

No, I wouldn't (yet.) Intent aside, it'll be impossible to provide the types of supporting docs required to prove main home.

[Questionguy101]

No, I wouldn't (yet.) Intent aside, it'll be impossible to provide the types of supporting docs required to prove main home.

I explained to him the problem. But he still wants to file for it. I told him if he wants to file, I will have to add a statement to explain clearly to the IRS that he has not moved in to the house yet. I will explain for him to the IRS the reason (waiting for job transfer) and that he intends to occupy it as his main home though. He wants to go ahead.

Would you file for him if he agrees to add a statement which discloses to the IRS that he still has not moved in to the house?

[BP.]

Would you file for him if he agrees to add a statement which discloses to the IRS that he still has not moved in to the house?

Heck no. FTHBC fraud, an unqualified buyer & preparer penalties all would preclude filing a 5405 for this person.

From 5405 instructions- See bottom of page one:
http://www.irs.gov/pub/irs-pdf/i5405.pdf "Your main home is the one you live in most of the time." The client either meets this rule, or doesn't. Attaching a signed statement can't change that, especially since what won't be attached is the proper eligibility documentation.

[Questionguy101]

Heck no. FTHBC fraud, an unqualified buyer & preparer penalties all would preclude filing a 5405 for this person.

From 5405 instructions- See bottom of page one:
http://www.irs.gov/pub/irs-pdf/i5405.pdf "Your main home is the one you live in most of the time." The client either meets this rule, or doesn't. Attaching a signed statement can't change that, especially since what won't be attached is the proper eligibility documentation.

Thank you.

So is there a time limit to file or to move in to the main house? What about if he has to waited another 3 months (which will be 6 months after he purchased the house) for the job transfer before he moves into it? Will he be disqualified because it has taken too long for him to make the property his main home?

[veritas]

Interesting

The home must meet the the meaning of principal residence as defined in § 121.

[S T]

Interesting question

I keep reading

You already know the dates of purchase, purchase date/occupancy date is one of the qualifying factors for FTHBC.

. Which home purchases qualify for the first-time homebuyer credit?

A. Any home purchased as your principal residence and located in the United States qualifies. You must buy the home after April 8, 2008, and before May 1, 2010 (with closing to take place before July 1), to qualify for the credit. For a home that you construct, the purchase date is considered to be the first date you occupy the home.

You all ready know that you have to live in the home for three years and use it as your principal residence after purchase

after I purchase, how is the credit repaid and how long would I have to repay it?

A. If, within 36 months of the date of purchase, the property is no longer used as your principal residence, you are required to repay the credit. Repayment of the full amount of the credit is due at the time the income tax return for the year the home ceased to be your principal residence is due. The full amount of the credit is reflected as additional tax on that year's tax return. See Form 5405 and its instructions about repayment of the credit. (5/6/09, 1/27/10)

So I believe that is your answer - Purchase date (count 36 months) occupy home for 36 months as principal residence. I can't see a exclusion or time extension due to job transfers, marital separation or other unforeseen circumstances. The closest scenario I found was

moved in the home in January 2009. Can they claim the $8,000, since they did not occupy the home until 2009?

A. No. Taxpayers who purchase an existing home and renovate the property before moving in are eligible for the first-time homebuyer credit based on the date of purchase, not the date of occupancy.

Doesn't seem to be a direct answer to your client's situation, except the purchase date and the 36 months of occupancy as the principal residence.

Hope this helps

Sandy