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Homebuyers Credit Confusion

2009-01-13 by

Today TaxMama hears from Tonia in Virginia who says. “My mother added me as co-owner on her two homes. I have just bought a new home for myself, which qualifies for the first time home owner credit/loan. Will being co-owner disqualify me?”

Dear Tonia,

Re-reading the information about the First-Time Homebuyer Credit, it says “You did not own any other main home during the 3-year period ending on the date of purchase.”

I looked at a couple of other places, too, including the law. The law says nothing about being on title to other real estate, vacation homes, etc. So, that’s in your favor.

You’ll find more information about the credit here, in IRS Publication 530:
http://www.irs.gov/publications/p530/ar02.html#en_US_publink100046409

Be careful though. Did you live with mom? If your principal residence was one of the homes to which your mom added you on title, you could be disqualified for the credit. If neither home was your principal residence, it’s not an issue.

Enjoy the new home – and the tax credit. But remember, it’s just a loan. You’ll have to repay it over the next 15 years.

And remember, you can find answers to all kinds of questions about the First-Time Homebuyer Credit and other tax issues, free. Where? Where else? At TaxMama.com

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All Comments RSS

  1. Dave Andrew Says:

    Be careful, though… My wife's cousin had a horror story when the house he was given (added as co-owner) was the subject of unpaid tax liens and loans much greater than the value of the house, and he went into a lot of debt from it.

    Also, doesn't that action trigger a gift tax if half the value is greater than about $12K, the maximum gift allowed?

  2. Thomas Avery Blair, EA Says:

    This home purchase credit can make a big difference with interest-free money with a bit of finesse' and effort.

    Tax client brought me a plan drawn by his financial advisor. Qualified to use $6K of the $7,500 max credit to eliminate 2008 income tax obligation and then put taxes saved (refunded) into a Roth IRA.

    He only asked me about it because he wasn't aware that the "savings credit" has income limitations…but his idea still "has legs" financially and I thought I might mention it so others might care to comment.

    Wishing you all many happy returns.

    Respectfully submitted,

    Thomas Avery Blair, EA


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