First Time Home Buyer Tax Credit
My spouse owned a home three years ago. Do we qualify for the First Time Home Buyer Tax Credit?
Same question about the First Time Home Buyer Tax Credit qualification. Just thought I should give you more details. In August of 2006, my wife bought the house her parents are living in currently because she had excellent credit. She was trying to help out her desperate parents. They pay the mortgage payments but the house is in her name. She lived there a year (until July of 2007) and then moved out once we got married. She's not making any money in rent (her parents pay the exact mortgage amts). We also did standard tax filing for the past 2 yrs and therefore never claimed the mortage payments. Now my wife and I want to buy a house. Her mother was going to be the co-signer with me since my wife's credit isn't good at this time. The problem is because she's not a first time home buyer, we both don't qualify for the credit. Therefore even though I'm a first time home buyer and she's not going to be in the mortgage, we can't take advantage of this incentive. Given the situation, is there anything we can qualify for? Is the gov't going to change this rule in case they extend the deadline? I find this very unfair because unmarried couples can buy a home together and claim the credit even if one of them doesn't qualify. Please help. Thank you so much Bill!
By
Mark Cappel
- The First Time Homebuyer Tax Credit program was a government program to lower the cost of buying a home.
- First time homebuyer tax credit program benefits only applied to a primary residence.
- This was a great government program, and spurred significant home buying.
Homebuyers who purchased a home in 2008, 2009 or 2010 may be able to take advantage of the First-Time Homebuyer Credit. The credit:
- Applies only to homes used as a taxpayer’s principal residence.
- Reduces a taxpayer’s tax bill or increases his or her refund, dollar for dollar.
- Is fully refundable, meaning the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.
In general, you can claim the credit if you are a first-time homebuyer or a long-time resident of the same main home. You are considered a first-time homebuyer if you meet all of the following requirements.
- You purchased your main home located in the United States:
- After December 31, 2008, and before May 1, 2010, or
- After April 30, 2010, and before July 1, 2010, and you entered into a binding contract before May 1, 2010, to purchase the property before July 1, 2010.
- You (and your spouse if married) did not own any other main home during the 3-year period ending on the date of purchase.
- You do not meet any of the 10 conditions listed on page two of the IRS document Instructions for Form 5405 (PDF).
Keep in mind this tax credit is not free money. The first-time homebuyer credit is similar to a 15-year interest-free loan. Normally, it is repaid in 15 equal annual installments beginning with the second tax year after the year the credit is claimed. The repayment amount is included as an additional tax on the taxpayer’s income tax return for that year.
First-Time Home Buyer Tax Credit and You
If I understand your message correctly, your spouse purchased a home for her parents. It was your spouse’s parent’s main home and not your spouse’s main home. The rule is that you do not qualify if “You (and your spouse if married) did not own any other main home during the 3-year period ending on the date of purchase.” If the house was not her main home, your spouse qualifies for the First Time Home Buyer Tax Credit.
Let us say for the sake of argument that the property was your spouse’s main home at that time. Notice the time limitation regarding the rule. If your spouse considered that property her main home, at some point in 2007 it stopped being her main home. Therefore, on the three-year anniversary or her quitting the home in 2007, that is the date she becomes qualified for First Time Home Buyer Tax Credit.
I hope this information helps you Find. Learn & Save.
Best,
Bill
-
Kkim,Apr, 2010I would love to know if someone has an answer for this. My husband and I bought a house at full market value of $200,000 that my parents had been using as a rental. We paid all of the closing costs and even had to dig a new well for just under $7,000 to meet the HUD requirements since there was no septic mapping when the house was built in the 40s. I really think there should be some kind of loophole for this- not everyone is trying to scam the government and its not fair to do everything by the book and be excluded from the tax break.
-
BABill,Mar, 2010Aside from the seller selling the home first to a strawman buyer, and then the buyer buying it from the strawman, I cannot think of a means to avoid what Congress wrote into the law. Readers, suggestions?
-
NNicole,Mar, 2010My husband and I purchased a home from my parents Dec 30, 2009 for the fair market value of $169,000. This is our primary residence and we obtained a legitimate mortgage and everything. It seems unfair that if the only thing that is keeping us from the tax credit is the fact that we purchased from our parents. Is there any loophole if you purchase the home at fair market value? I understand the governments position in trying to prevent quick cheap sales for the credit, but it doesnt seem fair to those of us who actually go through all of the procedures of buying a home legitimately. Please help
