Long time home buyer; bought August 2009

[Ross]

I have a client who bought a house in August 2009. She is recently divorced, but her and her ex-husband have owned their home for a number of years (I'm guessing at least 15 years). I told her she would not qualify for the credit unless the home was purchased after 11/6/09. However, she said she heard through another CPA in town that if you lived in your principal home for at least eight years, you can get the credit. Everything I have read says it must be purchased after 11/6/09. Before I call this other CPA, is there a credit available for a long time home buyer for an August 2009 purchase? TIA.

[KBTS]

The client probably heard what she wanted to hear from the other CPA - or it could have been her beautician, mechanic, cousin, etc. You are correct, the home had to be purchased after Nov. 6, 2009. See the chart on page 11-4 of TTB for all the details.

[Ross]

This client had an appointment with me on Sunday. Before she even gets into my office, she asked what I found out regarding the $6,500 credit. I told her she didn't qualify, handed her a copy of this thread. I also wrote on the bottom that it had been viewed 52 times by other tax preparers and nobody disagreed. She then asked me about some $800 credit for teachers. I told her about the $250 deduction, but I wasn't aware of any $800 credit for teachers.

She still thought we needed to do some research on the $6,500 credit. I told her I could prepare her return and see how it comes out, and hold off on e-filing it. She didn't want to do that, and left saying she would call me. Today she calls wanting a copy of her 2008 return. I assume she is going to another preparer. Are they going to doctor her closing statement and change the date to post 11/6/09?!?

I have another long time client who bought a house on a land contract. He recently had a foreclosure so he didn't qualify for the 1st time home buyer credit but was aware of the long time home buyer credit. I recall him telling me about the house last tax season. He called and said he should get this credit. I told him it had to be purchased after 11/6/09. He said it was closed on 12/6/09. He was only renting earlier in the year. I said I would need a copy of the land contract. He obviously changed the date on the land contract. It didn't even line up correctly! He even missed changing one of the dates! On the second page it reads "The sum of $202, or more, on or before the 1st day of March, 2009"!!!

Just to confirm that it was done earlier in the year, I called the attorney's office who prepared it. Yes, it was executed on March 1, 2009. I imagine there are smarter people than this that alter their documents. I can see why the IRS is putting a great effort into auditing these home buyer credits.

[David1980]

She still thought we needed to do some research on the $6,500 credit.

Yeah, after showing her the info that she doesn't qualify if she says she does I'd fire her as a customer myself.

Are they going to doctor her closing statement and change the date to post 11/6/09?!?

I doubt it. More likely the preparer will either ignore whatever message their software gives them that it doesn't qualify. Either that, or they'll enter the date wrong in the 5405 to get it to qualify. Probably will get sent back to her and won't get through the processing. So you might get her back as a customer after her return is refused.

[RitaB]

Sounds like a good one to lose

Here's a link I keep e-mailing people. Can't believe this credit and the work it takes just to keep up with the changes!

http://www.irs.gov/newsroom/article/0,,id=202222,00.html

Agree with others, let her go. Can't believe she said "we" need to do some more research... does she have a mouse in her pocket?

[RitaB]

Yikes

He obviously changed the date on the land contract. It didn't even line up correctly! He even missed changing one of the dates! On the second page it reads "The sum of $202, or more, on or before the 1st day of March, 2009"!!! ...I can see why the IRS is putting a great effort into auditing these home buyer credits.

No telling how much of this type thing happens. Wow.

[taxmom34]

there was an article on the news a few months ago that said that for tax year 2008 there were 700,000 returns fraudulantly filed to claim the first time home buyers credit. most of them no such address. i couldn't believe so many people would deliberately do that. i think that's why IRS is asking for documentation to at least curtail some of this.