Comments on: Home buyer tax credit extension update; House Passes Bill…On to President for approval

By: Dennis Norman

Dennis Norman — Mon, 18 Jan 2010 16:29:28 +0000

Mary,
Wow, that’s a tough one…First, as far as a new home, below is a FAQ from the IRS website which indicates your “purchase date” is when you first occupy the home…So, if that is going to be February 2010 you are looking good…

Q. When do I have to buy a new home to get the credit?

A. The credit is available for eligible home purchases after April 8, 2008. You must enter into a binding contract to buy the home before May 1, 2010 and close before July 1, 2010, in order to obtain the credit. For a home you construct, the purchase date is considered to be the date you first occupy the home. (11/19/09)

Now, for the question re the $800k limit, here is what the instructions say for entering on the “price” of the home on Form 5405 (the hrom used to claim the credit)

“If you build, or contract to build, a new
home, your purchase price includes costs of construction.”

So, it doesn’t specifically say you would include the cost of the lot but personally I think that is implied and is probably the case. However, I’m not a CPA nor tax attorney and would suggest you talk with someone in one of those professions to confirm.

I have done an updated post that includes the new IRS form for claiming this credit as well as instructions on completing the form from the IRS…this post is at:

http://realestateconsumernews.com/home-buyers/irs-releases-instructions-on-how-to-claim-homebuyer-tax-credit/

Good luck,
Dennis

By: Mary

Mary — Mon, 18 Jan 2010 16:09:30 +0000

How does this credit work if you are building a house with land you bought previously? The sum of the land price plus the building contract exceeds $800,000. But they are two compeltely different transactions. I purchased the land from an individual in October, 2008 and signed a building contract with a builder in May, 2009. House will be ready in February, 2010. Am I disqualified from the credit?

By: Steve Hicks

Steve Hicks — Tue, 12 Jan 2010 04:20:39 +0000

My Question is:

Me and a friend bought a house in 1999. My name is the only one on the mortgage, taxes, utility bills, etc. but both names are on the Deed. We file separate returns and I have been the one to claim taxes, etc. on my return. We have both lived in this house since 2000. She wants to buy her own house now. Is she eligible for the $8k first time home owners tax credit?

Thanks!

By: Ashley

Ashley — Wed, 06 Jan 2010 05:06:28 +0000

Can someone help us? We bought our house in Sept.2009 from my husband’s half brother. Do we qualify since it says that close relatives are your parents, child, and grandparents. Also, I have another ? we just realized that my husband’s mom is the co-signer for my husband’s half brother of the house we just bought so does that mean she’s a close relative even though it wasn’t her primary residence nor did she pay for the mortgage? Thanks.

By: xzll

xzll — Tue, 05 Jan 2010 17:15:01 +0000

Hi Dennis,

I just got another question I hope you can help. For the 5 year period, our current house is settled on 2005/1/27,however, in the county’s record, it shows the date as 2005/3/7. So should the 5-yr period count from 1/27 or from 3/7? Since this will affect our closing date on the new house.

thx

By: Dennis Norman

Dennis Norman — Sat, 02 Jan 2010 23:04:07 +0000

You are welcome Elizabeth..Happy New Year

By: Elizabeth3121

Elizabeth3121 — Fri, 01 Jan 2010 17:26:20 +0000

Thanks Dennis & Ron for the (unfortunately accurate) information, creative solutions, & commiseration!

By: Ron

Ron — Mon, 28 Dec 2009 21:11:06 +0000

I got married 3 months ago and fall under the same situation as Elizabeth3121 above. We have been thinking about getting a quick divorce so that we would qualify for the tax credit and then remarry once we close on the new house in a month.

It’s sad that the government would punish those of us that decided to get married instead of just living together in ’sin’.

By: Dennis Norman

Dennis Norman — Sun, 20 Dec 2009 14:49:47 +0000

HI Elizabeth,
Below are some FAQ’s from the IRS site that I think address your situation…it appears that you are correct that you are not eligible for either credit as it appears you and your husband must both meet the requirements for a repeat buyer or a first time buyer…you should confirm this with a CPA or tax attorney though to be sure….Take care, Dennis

Married and Co-Purchasing Homebuyers
Q. I am a long-time resident (have owned and used my current home as a principal residence for five consecutive years out of the eight-year period ending on the date of purchase of the new residence) but my spouse has lived there for only three years. Can we qualify for the long-time resident homebuyer credit if we purchase a new principal residence?

A. No. Both spouses must have owned and used the same previous principal residence for five consecutive years out of the 8-year period ending on the date of purchase of the new principal residence to qualify for the credit. (12/14/09)

Q. I am a long-time resident and current homeowner and my spouse is a first-time homebuyer (has had no ownership interest in a principal residence during the three-year period ending on the date of purchase of a new principal residence) and we purchased a new principal residence. Can we qualify for either the first-time homebuyer credit or the long-time resident homebuyer credit if we purchase a new principal residence?

A. No. Both you and your spouse must be first-time homebuyers in order to qualify for the first-time homebuyer tax credit. Since you had an ownership interest in a principal residence during the three-year period ending on the date of purchase, neither you nor your spouse qualifies for the credit. Similarly, both you and your spouse must be long-time homeowners of the same previous principal residence in order to qualify for the long-time resident homebuyer credit. Since your spouse is not a long-time homeowner of your current principal residence, neither of you qualify for the credit. (12/14/09)

Q. I am a long-time homeowner of a principal residence and my spouse is a long-time homeowner of a different principal residence. Can we qualify for the long-time resident homebuyer credit if we purchase a new principal residence?

A. No. Both spouses must have owned and used the same previous principal residence for five consecutive years out of the eight-year period ending on the date of purchase of the new principal residence to be eligible for the credit. Since you and your spouse owned and used different principal residences, neither of you qualify. (12/14/09)

By: Elizabeth3121

Elizabeth3121 — Sun, 20 Dec 2009 06:34:23 +0000

My husband & I have been married 1 year. He has owned the condo where we live for 8 years. I have never owned real estate & have been living in the condo since we got married.

It seems we don’t qualify for either the $8K or $6500 tax credit. Is that true? Why would the law be written to exclude our situation?