First time homebuyers

[Charlie Miller]

Taxpayer bought a home in March 2010 and made settlement in that month. When he bought the home there were tenents living in it who were supposed to move within a few months. They were to pay rent while they were still in the house. Since then the tenents have refused to move. They have continued to pay rent. The taxpayer has tried to have them evicted but the sherrif won't do any thing because he doesn't have a landlord's license. He is afraid that if he doesn't move in before 12-31 he will loose the credit.

My thinking is that he should get the license so that they can be evicted. That should have no bearing on the credit. The house was legitimately purchased as a primary residence and I don't see date of occupancy as a requirement except where a house has been built. We will file for the credit as soon as possible in 2010. (We can't file for 2009 since he was a dependent then).

Any other thoughts?

[Dusty2004]

Move in

I do not have my Tax Book with me but as I remember it you have to move in to get the credit. My understanding is it to late - he did not move in on time.

Dusty

[BOB W]

Wow what a mess. Lesson to be learned here, at closing the home must be empty and BROOM CLEAN.

[JohnH]

Wow what a mess. Lesson to be learned here, at closing the home must be empty and BROOM CLEAN.

True. Especially when there's $8K on the table.

[Dusty2004]

Form IRs Website

Q. Who cannot take the credit?

A. If any of the following describe you, you cannot take the credit, even if you buy a new home:

You do not use the home as your principal residence.

Since he is not using the home as his principal residence he would not be eligible.

I had a couple that was closing 3 days before the deadline. I told them to go the next day and change their drivers license to the new house, sleep there the next week and make sure all utilities were changed over to their name. All this to prove they were living in the house.

Dusty

[taxea]

Taxpayer bought a home in March 2010 and made settlement in that month. When he bought the home there were tenents living in it who were supposed to move within a few months. They were to pay rent while they were still in the house. Since then the tenents have refused to move. They have continued to pay rent. The taxpayer has tried to have them evicted but the sherrif won't do any thing because he doesn't have a landlord's license. He is afraid that if he doesn't move in before 12-31 he will loose the credit.

My thinking is that he should get the license so that they can be evicted. That should have no bearing on the credit. The house was legitimately purchased as a primary residence and I don't see date of occupancy as a requirement except where a house has been built. We will file for the credit as soon as possible in 2010. (We can't file for 2009 since he was a dependent then).

Any other thoughts?

Doesn't it also have to actually be the primary residence as soon as the contract is signed? I don';t think one can take the credit if it is purchased "with the intent of it becoming the primary residence." I don't know what your state law is but if the owner refused to accept the rent it seems to me that the "tenants" would then have become unwanted or trespassing subjects and thereby arrestable.

Not enough info to determine whether proper procedures were taken from the beginning on the part of your client to insure that the credit could be taken.