Homebuyer's tax credit

[Gage 2]

I just wanted to pass on my recent experiences concerning buying a house and thinking I could claim the $6,500 homebuyer's tax credit for a second house. My wife had also owned her own home in Russia, so I had assumed we were eligible (or that they wouldn't even consider her previous ownership status since she is new here). We rushed out to buy a home before the April deadline on the tax credit. As we went to file taxes, we discovered that we don't qualify specifically because of her previously foreign status. They don't care if she owned a home in Russia or not, it would only qualify if she owned one here. No one to blame but myself on this one, I simply didn't read the rules closely enough. Not that it matter much in the end. With a baby coming, we had to buy a house in the next 4 months, so essentially we just bought a house a little earlier than we had to.

[rsn 135]

I just wanted to pass on my recent experiences concerning buying a house and thinking I could claim the $6,500 homebuyer's tax credit for a second house. My wife had also owned her own home in Russia, so I had assumed we were eligible (or that they wouldn't even consider her previous ownership status since she is new here). We rushed out to buy a home before the April deadline on the tax credit. As we went to file taxes, we discovered that we don't qualify specifically because of her previously foreign status. They don't care if she owned a home in Russia or not, it would only qualify if she owned one here. No one to blame but myself on this one, I simply didn't read the rules closely enough. Not that it matter much in the end. With a baby coming, we had to buy a house in the next 4 months, so essentially we just bought a house a little earlier than we had to.

According to IRS form 5405, you were denied the credit not because of your wife's previously foreign status, but because you and your wife did not inhabit the same house for 5 of the last 8 years.

Long-time resident of the same main home. You are

considered a long-time resident of the same main home if you

meet all of the following requirements.

1. You (and your spouse if married) previously owned and

used the same main home as your main home for any

5-consecutive-year period during the 8-year period ending on

the date you purchased your new main home.

Edited February 6, 2010 by rsn

[rin and john 71]

Spelled out in the IRS Q&A:

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

under "Married and Co-Purchasing Homebuyers"

Really sucks for newlyweds where one of the parties previously owned a house. If neither one previously owned a house, then they qualify (as long as the foreign spouse filed as a resident alien instead of a non-resident alien.

[aidankari 0]

My wife and I are in the middle of purchasing a house in MD. Neither of us have owned property in the past. I am just wondering how do you prove this to the IRS that you never owned a house before if you are from Ireland? We have been living in the same house in USA since Feb 09 and in Ireland for about 4 years on and off. (My wife spent some time in USA during that time). Is there a minimum time period that we need to be living togehter? If so how do we prove it, especially for Ireland?

Any help appricaited.

[Gage 2]

My understanding is that you can't have held a principal interest in any home for the three years previous before filing for the first time buyer's credit of $8500. I didn't see anywhere where you had to "prove" that you didn't own a house during that period of time, but the IRS will certainly check their database to make sure neither of you has claimed any mortgage interest on previous tax filings during the previous three years.

My interpretation is that the house in Ireland doesn't matter. The IRS doesn't have the ability (nor the time) to check real estate records in Ireland to see if you owned a home there. I think they're only concerned about if you've owned a home in the United States in the previous three years anyway. But obviously I didn't interpret my own tax status correctly before filing, so you might want to take my advice with a grain of salt.

[paul1979 0]

My wife and I are in the middle of purchasing a house in MD. Neither of us have owned property in the past. I am just wondering how do you prove this to the IRS that you never owned a house before if you are from Ireland? We have been living in the same house in USA since Feb 09 and in Ireland for about 4 years on and off. (My wife spent some time in USA during that time). Is there a minimum time period that we need to be living togehter? If so how do we prove it, especially for Ireland?

Any help appricaited.

Even if you owned a home abroad it wouldn't matter, you are still eligible:

Q. Would I be considered a first time homebuyer if I owned a principal residence outside of the United States within the previous three years?

A. Yes. A taxpayer who owned a principal residence outside of the United States within the last three years is not disqualified from taking the credit for a purchase within the United States.

http://www.irs.gov/newsroom/article/0,,id=206291,00.html

My wife and I are in the middle of purchasing a house in MD. Neither of us have owned property in the past. I am just wondering how do you prove this to the IRS that you never owned a house before if you are from Ireland? We have been living in the same house in USA since Feb 09 and in Ireland for about 4 years on and off. (My wife spent some time in USA during that time). Is there a minimum time period that we need to be living togehter? If so how do we prove it, especially for Ireland?

Any help appricaited.

Even if you owned a home abroad it wouldn't matter, you are still eligible:

Q. Would I be considered a first time homebuyer if I owned a principal residence outside of the United States within the previous three years?

A. Yes. A taxpayer who owned a principal residence outside of the United States within the last three years is not disqualified from taking the credit for a purchase within the United States.

http://www.irs.gov/newsroom/article/0,,id=206291,00.html

[dimanuni 1]

Don't want to hijack the thread, but my husband and I are closing on a house April 9. Problem is, he doesn't have his green card yet. He arrived on K-1 visa Oct 1, 2009, we mailed in AOS docs in Dec. His file was sent to CSC January 19 (which I understand means faster processing...I hope), we received an email last week that they've ordered production of his EAD, and we received AP. But no Green Card yet.

I'm wondering, can we claim the full $8,000 first-time homebuyer credit? Neither of us has owned before and we meet the income limitations. But he won't have met the substantial presence test by April 9, and no one can say if he'll have the green card in time.

Any ideas? The loan will be in my name anyway, he'd just be on title. But I'm wondering whether it'd be better to remove him from the title, or whether I can take the $8000 anyway because we'll be filing joint for 2009, electing him to be treated as a US resident for tax purposes. He hasn't made any money anyway.

Thanks for any input!

Rebecca

[Nich-Nick 3,354]

Q. Who cannot take the credit?

A. If any of the following describe you, you cannot take the credit, even if you buy a new home:

• Your income exceeds the phase-out range.
  
• You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild.
  
• You do not use the home as your principal residence.
  
• You are a nonresident alien.
  

BUT he will be a resident alien for tax purposes for the entire year of 2009 if you send in the statement signed by both of you. So I'm thinking that fourth bullet item does not apply to your husband as far as the IRS dealings. So I think you are eligible.

[dimanuni 1]

Thanks Nich-Nick!! I called the IRS as well (who knew you could call them at 9 pm at night?) and they confirmed it. That was before I knew you were the tax guru (from other threads)

Thanks again!

Q. Who cannot take the credit?

A. If any of the following describe you, you cannot take the credit, even if you buy a new home:

• Your income exceeds the phase-out range.
  
• You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild.
  
• You do not use the home as your principal residence.
  
• You are a nonresident alien.
  

BUT he will be a resident alien for tax purposes for the entire year of 2009 if you send in the statement signed by both of you. So I'm thinking that fourth bullet item does not apply to your husband as far as the IRS dealings. So I think you are eligible.