Form CP12 received

[superman]

Client just received this letter stating that they are disallowing the long-term home buyer credit of $6500.00 because he and hs new wife did not live in the same house for the 5 years before the purchase of their new house. Some other important info both people on the return have lived and owned their primary house for over 5 years prior to getting married and buying a new house together. The client called IRS and they said they had to have lived together to get this credit. WHAT!!!

Is there anything out there as to the rules I looked in TTB on pg 1-18 and it says nothing about this. Has anyone encountered this issue as of yet?

The problems have already started it will be a long summer!!

Would you charge for this to help out this client or just do it?

Superman

[BP.]

Both need to occupy same prior home-
From IRS Home Buyer Scenarios Page- (Lots of good info there)

Married and Co-Purchasing Homebuyers
Q. I am a long-time homeowner of a principal residence and my spouse is a long-time homeowner of a different principal residence. Can we qualify for the long-time resident homebuyer credit if we purchase a new principal residence?

A. No. Both spouses must have owned and used the same previous principal residence for five consecutive years out of the eight-year period ending on the date of purchase of the new principal residence to be eligible for the credit. Since you and your spouse owned and used different principal residences, neither of you qualify

Also stated briefly in TTB, p. 11-4, top of right column.

Have had this issue/question from many clients, but since I knew they did not qualify, I did not do the 5405.

Nothing really to charge them for, as there's nothing you can do to help them. In fact, I'd almost feel I owed them a refund on what I charged for the 5405, since they were not qualified, which I consider my job to figure out.

[BP.]

Little more about how I look at the 5405- With all the fraud associated with this credit, I am super careful about qualifying a client before I agree to prep the 5405. I don't want to sign off on a return where the credit is disallowed. NOT AT ALL insinuating there was fraud associated with superman's client; I just don't want the scrutiny on my PTIN for rejected 5405's.

Have had several people call to annonce they qualify, but on further investigation, they don't. So they don't engage me to prep, they just go elsewhere, and maybe find someone who will agree to file the 5405 for them.

And I make sure I'm the one attaching all the proof docs and putting the package together for the client so we can minimize the chance of disallowance or requests for more info.

Have done several (not cheaply either) and it is probably too soon to know the outcomes. But I appreciate everyone giving feedback here on their experience so we know what to expect, so thanks, superman for your post.

[peggysioux]

Long-Time Resident Home Buyer Credit

If taxpayer was married and within the last five out of eight years lived with his wife and jointly owned home with wife. In 2009 taxpayer is divorced and bought home on his own; would he qualify for the long-time resident home buyer credit? Or would he only qualify if he purchased another home with his wife??