client's creative idea for long term home buyer credit

[NECPA in NEBRASKA]

Client inherited house from parents and owned it as tenants in common with her sister for a few months. Her sister passed away and now she wants to sell her sister's 1/2 of the house to her son and daughter-in law and thinks that they should qualify for the $6,500 credit. They would otherwise qualify for the credit, but I just don't think that this is correct. They would then own the house as tenants in common. Am I being too conservative? I couldn't find this scenario anywhere. I just don't have much imagination, I guess. ANy comments would be appreciated. Thanks!

[Don in Upstate NY]

Client inherited house from parents and owned it as tenants in common with her sister for a few months. Her sister passed away and now she wants to sell her sister's 1/2 of the house to her son and daughter-in law and thinks that they should qualify for the $6,500 credit. They would otherwise qualify for the credit, but I just don't think that this is correct. They would then own the house as tenants in common. Am I being too conservative? I couldn't find this scenario anywhere. I just don't have much imagination, I guess. ANy comments would be appreciated. Thanks!

Non-tax response: Just what every young woman wants - to share a home with her mother-in-law.

[TAXBILLY]

>>she wants to sell her sister's 1/2 of the house<<

It's not her sister's half that she is selling. It is HER half that she inherited. She is the owner.

taxbilly

[NECPA in NEBRASKA]

She did agree with me tonight that it wouldn't work.

[Lion EA]

I don't think you can sell part of a house at a time, even though you can sell a whole house to multiple owners at the same time, and qualify the new owner as purchasing a house. I think the credit is available on a house basis. Not even looking at whether those relatives qualify, which you should look at. I'd research this if you're considering taking the credit.

[NECPA in NEBRASKA]

I wasn't thinking about taking the credit. I never thought that it would work. The remaining sister was trying to come up with a way that her son could get the $6,500 credit. She called me back and said that after she thought it out, that she agreed with me that it wouldn't work.