First time homebuyer credit

[kcjenkins]

From something I am on an Email list serve for. The person asking the question of the iRS office is a CPA/ Tax lawyer type.

"I told a relative recently who bought 2/3 the old family homestead from his Brother & sistaaaaah that he qaulifies for FTHB Cr. and they just closed last Friday . This relative inhertted 1/3 of it. OUCH...!!!!!!!!!!

Recently, the question arose as to whether an individual who inherits 50% of a residence from a decedent and purchases the other 50% from his or her brothers and sisters for $200,000 can claim a first- time homebuyer credit based on the purchase price of the 50% interest, and if so, in what amount. In a recent conversation with a representative in the National Office of IRS, I was advised that the position of the branch that deals with the first-time homebuyer credit is that if any portion of a residence is acquired by inheritance, the residence does NOT qualify for the credit. Based on the statutory language defining the word "purchase," query whether there is a reasonable basis for taking a contrary position and attaching Form 8275? You might want to be especially careful in giving advice regarding the first- time homebuyer credit since the statutory language is new and particularly intricate and there is little official guidance out on the subject. "

[jainen]

>>the statutory language defining the word "purchase" <<

It is a good question, but a long shot. The definition starts out well enough, "The term 'purchase' means any acquisition," which sounds like an inheritance would qualify. Then it goes on, "but only if... the basis of the property in the hands of the person acquiring such property is not determined... in whole or in part by reference to the adjusted basis of such property in the hands of the person from whom acquired." You would have to argue that you acquired it directly from the decedent (before the basis step up) rather than through the estate.

Maybe she could buy the siblings' share from the estate before it closes, then later inherit the rest.