ANOTHER FTHB CREDIT QUESTION

[AnnieR]

Prospective client called a short time ago...husband and wife married on October 11, 2009, husband sold his house (which was in his name only) on November 4, 2009. She expects to close on a new house on January 26, this house is in her name only. She has never owned a home before, can she claim FTHB credit if she files MFS? and can she claim it on the 2009 return?

Thanks in advance

AnnieR

[mcb39]

Did the husband live in the house he sold for three out of the last five years? If so, wouldn't he also be a qualified FTHB?

[Pacun]

She doesn't qualify for the 8K first time home buyer.

[mcb39]

Otherwise, she does not qualify and even if she did and filed MFS, she would only qualify for half the credit.

Now, in black and white...."An individual (and, if married, the individula's spouse) who has maintained the same principal residence for any 5 consecutive year period during the 8 year period beginning on the date of the purchase of a subsequent principal residence is treated as a first-time homebuyer, effective for purchases after November 6, 2009. However, the maximum allowable credit is $6,500.

I had my years wrong in my first answer, but, as I see it, the only out for them is if he lived in the home that he sold for five out of the previous eight years. Otherwise, they do not qualify.

I had a gal who bought a house in her name in August; then got married in September; which qualified her for the $8000 credit.

[Don in Upstate NY]

...husband and wife married on October 11, 2009, husband sold his house (which was in his name only) on November 4, 2009. She expects to close on a new house on January 26, this house is in her name only. She has never owned a home before, can she claim FTHB credit if she files MFS? and can she claim it on the 2009 return?

Check the instructions on the 5405. It requires that taxpayer (and spouse if married) did not own a home for past three years. Doesn't matter if house is in her name only or if she files MFS. She doesn't qualify.

[Bob Hoffman]

How about the new $6,500 credit for previous owners?

[mcb39]

How about the new $6,500 credit for previous owners?

I edited my second post above to that effect. They could qualify for the $6,500.

[Don in Upstate NY]

How about the new $6,500 credit for previous owners?

There was a thread on that recently, or maybe it was in the NATP weekly. In any event, if one spouse qualifies for the $8,000 FTHB and the other qualifies for the $6,500 version, they they qualify for neither. :mad:

[jainen]

>>There was a thread on that recently, or maybe it was in the NATP weekly.<<

I'll be sure to note that in my audit file, under "substantial authority."

[mcb39]

>>There was a thread on that recently, or maybe it was in the NATP weekly.<<

I'll be sure to note that in my audit file, under "substantial authority."

Jainen, did you read my post (#4)? What exactly are your thoughts on this scenario?

[taxguy057]

She doesn't qualify for the 8K first time home buyer.

She gets the 6.5k credit correct?

[Pacun]

As I said before, she doesn't qualify for the 8K First time home buyer credit or any portion of it, period.

If her husband used the old house as his main home for 5 years out of the last 8 years, then maybe she qualifies for the $6,500 credit if they file jointly. Depending on the state where they live in, the husband (even though he is not the owner of the house per se) might qualify for half of the credit if they file MFS.

[taxguy057]

There was a thread on that recently, or maybe it was in the NATP weekly. In any event, if one spouse qualifies for the $8,000 FTHB and the other qualifies for the $6,500 version, they they qualify for neither.

That totally makes no sense at all... any idea on the logic behind that (if any b/c I knw we're talking about tax law here... LOL!)?

[Don in Upstate NY]

That totally makes no sense at all... any idea on the logic behind that (if any b/c I know we're talking about tax law here... LOL!)?

The requirements for either the $8,000 version or the $6,500 version are placed upon the taxpayer (and spouse if married.) If one spouse qualifies for the $8,000 but the other does not, they cannot get the $8,000. Likewise, if one qualifies for the $6,500 but the other does not, they cannot get the $6,500.

[still looking for original thread )

[Pacun]

Don, I found something for you. You could be right.

Who qualifies for the credit?

The buyer must have lived in the same principal residence for five consecutive years out of the past eight-year period prior to the date of purchase of a new principal residence.

The home must have been the buyer's primary residence. A principal, or primary, residence is where you live for most of the year.

In the case of a married couple, both spouses must have owned and lived in the same principal residence for five consecutive years out of the eight-year period, prior to the date of purchase of the new principal residence.

Married couples would therefore be disqualified under these situations:

One spouse meets the five-year test, but the other has lived in that same home for less than five years.

Each spouse has owned a principal home separately and now the couple wants to buy a principal home together.

However, a single person who buys a home using the credit and later marries does not have to repay it.