FTHBC - Bought vacant land from parents.

[Ray in Ohio]

Taxpayers bought vacant land from spouse's parents. They then proceeded to built a new home on this land. They moved into this new house in July 2009. I am unable to find anything on the IRS website regarding this type of situation. Wouldn't the cost of the construction of the new house qualify for the First Time Home buyers credit? I would not include the cost of the land, but I am thinking the cost of the new house would/should qualify.

If anyone knows anything further on this, I would appreciate any input. Thanks!

[ILLMAS]

Home Construction

Q. I plan to build a home and occupy it in 2009 or early 2010. Can I claim the first-time homebuyer credit now and use the funds toward the down payment or other ongoing construction costs?

A. No. To qualify for the first time home buyer credit, the residence must be purchased. By statute, a residence which is constructed by the taxpayer is treated as purchased on the date the taxpayer first occupies the residence. (05/06/09)

Q. I entered into a written home construction contract with a homebuilder before May 1, 2010, and the contract provides for completion of the home before July 1, 2010. Can I take the credit for the construction costs?

A. Your home construction contract qualifies as a binding contract, entered into on or before April 30, 2010, to close on the purchase of a principal residence on or before June 30, 2010. If you occupy the home on or before June 30, 2010, and meet the other requirements, you can take the credit. (12/17/09)

Q. I entered into a written home construction contract with a homebuilder before May 1, 2010, and the contract provides for completion of the home before September 1, 2010. Can I take the credit for the construction costs?

A. Your home construction contract does not qualify as a binding contract to close on the purchase of a principal residence on or before June 30, 2010. Therefore, you do not qualify for the two-month extension of the deadline for completing the purchase in the case of a binding contract. However, if you occupy the home on or before April 30, 2010, and meet the other requirements, you can take the credit. If you do not occupy the home on or before April 30, 2010, you cannot take the credit.

source:

http://www.irs.gov/newsroom/article/0,,id=206293,00.html

Hope this help

[Ray in Ohio]

Thanks MAS.

It doesn't specifically address my situation. The taxpayers moved into the home in July. The IRS classifies that date as the "purchase" date. They meet all the other requirements, other than the land was purchased from a relative and I don't know if that also disqualifies the cost of building the house.

Any others?

[kcjenkins]

You can count the house, but not the land.

[TAXBILLY]

Agree with KC.

taxbilly