New Home Buyer Tax Credit Law Explained

Posted on | July 16, 2009 | 2 Comments

GUEST POST FROM MICKEY BROOKS-

Matt,

 Thanks for letting me respond to this question for you and your blog readers.

 First, the disclaimer – I am not a tax expert so the client should refer to a qualified accountant or CPA regarding their particular situation.

But, here is the exact text of an answer to the same question from the National Association of Home Builders. I had this at hand because I just got the same question from 2 of my clients yesterday. I discussed this with a couple of local CPA’s and they say the tax law specifically allows for the description of the use of the credit as described below. I am waiting for them to supply me the text of the tax code that addresses this.

Q – What is the definition of a first-time home buyer?
A – The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse. So, it is very clear for married buyers.

For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit.

However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter, or an unmarried couple wishes to purchase a home together and one of them has owned a home in the past three years. In the unmarried couple’s case, the partner who has not owned a home in the last three years would file as a single taxpayer and have their partner allocate the credit to them.

Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.

Best regards, and thanks for all you do…

Mickey Brooks
Mortgage Planner
JLB Mortgage Group
11769 Whisper Bay Ct
Carmel, IN  46033
317.218.0283 (Office)
317.218.0291 (Fax)
888.249.4003 (Toll Free)
mbrooks@jlbmortgagegroup.com
www.jlbmortgagegroup.com