Long-time homeowners and divorce

[Mike Mac]

A married couple co-owned and lived in their home as a principal residence and meet the five out of 8 year requirement for Long-time homeowners. They got divorced in January, 2010 and recently sold their home. One of the ex-spouses will likely buy a home before the May 1, 2010 binding contract date and qualify for the $6,500 credit. The other ex-spouse is also considering buying a different home.

It would appear from my reading that both ex-spouses each qualify for a $6,500 credit if they meet the purchase date requirements. Does that sound correct?

I know that the eligibility for the credit is determined by the status of an individual on the date of the purchase of the new principal residence but it would seem to me that it would be wise to wait to claim the credit when the 2010 returns are filed rather than amend the 2009 return due to the fact that they were married in 2009. Plus if only one of the spouses purchases a house before May 1, 2010, I don't have to worry about how an amended 2009 refund would be split. Have any of you run into this situation yet?

Thanks,

Mike

[Bees Knees]

I would inform the client(s) of the issues involved and let the client decide what year to claim the credit. You can always go back and amend if the situation at the end of 2010 changes. A $6,500 refundable credit is a big chunk of change for many people, and I don't think you should be the one to make the timing decision for them.