Another First Time Home Buyer Tax Credit Question

[Questionguy101]

Taxpayer bought a house in March 2010...almost 1 year ago.

But he did not move into it until last week...so the house finally became his home almost 1 year after he bought it.

He said the reason is that he fixed up the house himself. Since he has a full time job, he could only do the fixing up bit by bit during the weekend. That's why it had taken that long to move into the house.

Would you claim the First time Home Buyer tax credit for him?

[Gene V]

Taxpayer bought a house in March 2010...almost 1 year ago.

But he did not move into it until last week...so the house finally became his home almost 1 year after he bought it.

He said the reason is that he fixed up the house himself. Since he has a full time job, he could only do the fixing up bit by bit during the weekend. That's why it had taken that long to move into the house.

Would you claim the First time Home Buyer tax credit for him?

From IRS Website

First-Time Homebuyer Credit: Scenarios

• S8. A qualifying taxpayer bought a home in August 2008 that needed a lot of work before occupying. They finished the renovations and 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.

[Questionguy101]

From IRS Website

First-Time Homebuyer Credit: Scenarios

• S8. A qualifying taxpayer bought a home in August 2008 that needed a lot of work before occupying. They finished the renovations and 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.

Thank you for the info, Gene.

It's a hard to understand though. Are they saying that since it is based on the date of purchase, the taxpayer is not qualified because he did not make the house his home on the date of purchase? So even if you move in to the house on the next day after the purchase, you are still not qualified?

If that's the case, I think 99.99% of the home buyer would not be qualified. Who would be able to move into the house on the date of purchase anyway?

[luke]

yes

quote from IRS website confirms that they CAN take credit - "based on date of purchase not date of occupancy"?

[Questionguy101]

quote from IRS website confirms that they CAN take credit - "based on date of purchase not date of occupancy"?

Not to dispute your opinion, but it seems to me the quote from the IRS actually implies that the taxpayer CANNOT claim the credit...

"• S8. A qualifying taxpayer bought a home in August 2008 that needed a lot of work before occupying. They finished the renovations and 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."

[okie1tax]

FTHB Credit

The answer given by the IRS is because the purchase was made BEFORE the $8,000 credit was allowed.

[Koss]

Agree...

The example concludes that the taxpayer cannot claim the credit because the purchase date is before the applicable window. The example demonstrates that what matters is the date of purchase, and not the date of occupancy.

Questionguy101's client bought the house during the applicable window of time, but did not occupy it until after the window had closed. He appears to qualify for the credit.

My only concern would be whether the house meets the definition of main home for this taxpayer. According to the instructions for Form 5405, your main home is "the one you live in most of the time."

Brilliant definition. The one you live in most of the time when?

I'm probably making it more complicated than it needs to be. Clearly this definition is meant to exclude, and does exclude, a guy who rents an apartment in New York City, has never owned a home, and decides to buy a shack on the beach in Florida, while he continues to live in his rented apartment in New York, where he works, and maintains his driver license, voter registration, etc. That's a vacation home, not a main home, and it doesn't qualify for the credit.

For Questionguy's client, it's facts and circumstances. If the guy bought it, fixed it up, and put it on the market for sale trying to flip it, or put it on the market for rent, and then after several months, decided, gee, I can't sell it or rent it, so I guess I'll live there, that might just kinda sorta disqualify him from the credit, 'cause it didn't exactly become his main home right after he bought it...

But if the facts and circumstances clearly show that it was meant to be his main home from the get go, then it probably qualifies.

BMK

[Burke]

Wasn't the "date of occupancy" thing something that applied to a home that the owner was under contract for and in the process of building?

[taxjungle]

Another FTHB Cr Question

Yes! It applies to construction of a home.