FIRST-TIME HOMEOWNER TAX CREDIT INFORMATION
Who exactly qualifies as a “first-time” homeowner?
According to the Federal Housing Tax Credit Website:
The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse. For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.
Eric Peltier, with Dovetail Lending, says:
If a first-time homeowner buys a house with a non-first-time homeowner, the first-time homeowner can receive the credit if the two owners are not married.
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My daughter and son-in-law did not own a home prior to this year. During this year (2009 CY) they purchased a trailer from his mother ($1,000) a couple of months ago and are now in the process of buying a house by the end of this month. Since these are both purchased in the year 2009, are they able to apply for the ‘first time home buyer’ tax credit for the house (which, of course, is considerably more)? If you don’t know the answer, can you tell me where to go to get the answer?
Thanks,
Great question Bill!
Although I do not have a definitive answer, I’ll provide some info and a couple of resources.
My first question to you would be whether the sale was transfered via an official title? Were your daughter and son-in-law both on the title? This will make a huge difference on whether they qualify. Click here for more info on those matters.
Will they be closing on the house before December 1, 2009? If not, they won’t qualify.
The IRS sheds some additional light:
Q. If a taxpayer purchases a mobile home (manufactured home) with land and qualifies for the credit, is the amount of the credit based on the combined cost of the home and land?
A. Yes. The first-time homebuyer credit is ten percent of the purchase price of a principal residence. The total purchase price (mobile home and land) is used to determine the amount of the first-time homebuyer credit.
Q. Is a taxpayer who purchases a mobile home and places the home on leased land eligible for the first-time homebuyer credit?
A. Yes. A mobile home may qualify as a principal residence and it is not necessary that the taxpayer own the land to qualify for the first-time homebuyer credit.
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 buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild.
* eco-modpod’s question: Since the trailer is purchased from you, a relative, and it does not qualify for the first-time homeowner credit, would the current home purchase then qualify? Contact the IRS (see link near bottom of this page)
You do not use the home as your principal residence.
You sell your home before the end of the year.
You are a nonresident alien.
Your home financing comes from tax-exempt mortgage revenue bonds. (This does not apply for a home purchased in 2009.)
You owned a principal residence at any time during the three years prior to the date of purchase of your new home. For example, if you bought a home on July 1, 2008, you cannot take the credit for that home if you owned, or had an ownership interest in, another principal residence at any time from July 2, 2005, through July 1, 2008.
Q. Does previously inheriting a home and living in the inherited home automatically disqualify an individual as a first-time homebuyer with respect to a different home that is purchased within the prescribed 2008 and 2009 time frames?
A. Yes, an ownership interest in a prior principal residence would preclude the taxpayer from being considered a first-time homebuyer. As long as the taxpayer owned and used the prior home as his principal residence, then he is not a first-time homebuyer. There is no exception for taxpayers who did not buy their prior residences. (05/06/09)
Q. Is a step-relative considered a related party?
A. Step-relatives are neither ancestors nor lineal descendents and are therefore not related persons for purposes of the first-time homebuyer credit. (05/06/09)
To see these and other Questions and Answers visit the IRS webpage: http://www.irs.gov/newsroom/article/0,,id=206291,00.html
For a definitive answer contact:
(best) The IRS http://www.irs.gov/contact/index.html
(next best) The mortgage lender/broker that your daughter and son-in-law is using.
(third best) The realtor that your daughter and son-in-law is using.
Best Wishes and hope that it works out in your favor!
Jen