Last week, we asked visitors and readers to submit their story if they have fallen victim to the unintentional “Marriage Penalty” in the Home Buyer Tax Credit. We got a number of comments and emails, which we’ll re-print below, but we hope that anyone who follows this issue and is affected would contact us so we can continue to put a human face on the issue.
First, from Anthony, in the Questions section:
We just put in an offer yesterday and it was accepted. But after reading your article I am slightly concerned about our eligibility for the tax credit.
My wife and I have been married for 10 years. In August 2003 (so 6+ years ago) we purchased a 2 family residence and have been living there ever since – renting out the other side.
When we were looking to buy, we already had one child so my wife was not working. I was the sole income. When we went to apply for the loan, the bank said my credit and salary were good enough to not need my wife on the application. He said it wouldn’t be an issue. So the application went through with just my name, but we had BOTH our names on all the contracts and documents. When we got to the closing everyone started panicing because they said that could not be done – my wife could not be on the contract and documents because the loan was in my name only. They said it wasn’t that big a deal so they just crossed out her name.
So – for the entire time we have been living in this house, it has been in my name. I always assumed she was still co-owner of it, but now I am nervous that when we apply for the 6500 tax credit on the new house, the IRS would consider her a “new” homeowner and me a “long time” homeowner so we lose.
Do you think that will be the case? Or is she automatically an owner because we were married for 4+ years already when we bought it?
Anthony was the first to raise what we’re calling the “fourth” type of marriage penalty: situations where a married couple has lived in a home owned by one of the spouses for at least five consecutive years out of the last eight, but who might not be eligible because both spouses did not have ownership. We’re still looking into the issue of eligibility, and we’ll provide an update as soon as we know.
We got a similar question from an agent via email:
I am unclear how to answer this for my buyers. They are move up buyers and would like to close in time for the tax credit, however they have own the home for 10 years but the wife wasn’t added to the deed untill 2005 , can they still get the credit? I read the information as well my client. But I am still a little unsure of the answer. Please advise!
Again, we’re looking into the answer, and hope to have an update.
As for the most egregious aspect of the marriage penalty — situations where the spouses qualify for different types of tax credits, but are ineligible because they have to qualify for the SAME tax credit — we got a great email from a reader as follows:
My wife Kristi and I were married in August of 2009 at which point we moved in together. Later that month she left the workforce to pursue her PHD in Social Work. With her out of the work force making ends meet is a challenge. As I result we have both picked up 2nd jobs. After tedious budgeting we decided that with the help from this tax credit we could purchase a small house together. We currently live in a small (and sometimes noisy) two bedroom condo I have owned for about 7 years (she has never owned a home before). We looked forward to finding something with a bit more space and a bit more quiet.
Our plan had been to find a nice little “fixer upper” to purchase and to use the tax credit on improving the structure. Not only would this tax credit “stimulate” us to purchase a house we would have put the received cash immediately back into our local economy. Unfortunately it doesn’t look like either of those two things will happen. She would qualify for the $8,000 tax credit on her own and I would qualify for the $6,500 tax credit without her. Together we qualify for nothing.
Don’t feel too bad for us, if the last 5 months has taught us anything it’s that together we are capable of far more than either one of us are alone. I have no doubt’s she will successfully receive her degree (despite less than ideal studying conditions at home) and I’ll continue to do what it takes to make enough money to give her support her in any way I can.
Does this make any sense at all? Here’s a couple that got married last year, where he qualifies as a long-time homeowner, and she qualifies as a first-time home buyer, but they are collectively ineligible as a couple because they don’t qualify for the same type of credit. But if they hadn’t gotten married last summer, they would be able to split as much as the $8,000 credit she would otherwise (depending on income) be entitled to.
And then finally, we have an email from V., who raised the issue of a married couple where only one spouse is qualified, and the couple is then not eligible:
My husband bought his 1st house in April 2001 in October 2007 we refinanced the house to put it in my name and his name then in July 2009 we sold the home.
In July 2008 we got married. My husband owned a home for 8 years and I owned a home for a 22 months. We built a new home and closed on in November after Obama signed the new law for the move up program.
Obviously neither of us qualified for the $8000.00 1st time home owner tax credit and come to find out we don’t qualify for the $6500.00 move up program either.. BECAUSE both people after to qualified meaning both us of had to own a home for 5 years consecutively within the past 8 years. BUT if we weren’t married and bought our new home my husband could qualify for half of the $6500.00 so he could have gotten back $3250.00 on his taxes. I couldn’t get anything, which is fair cause I didn’t meet either qualifications. To me this is discriminating against people getting married. If we had waited till 2010 to get married then my husband could of have an extra $3250.00.
Thanks to everyone for contributing. Please keep sharing your stories.
Joseph,
Thankfully, after some extensive searching this past weekend on the Internet
I stumbled upon the article you posted last Tuesday on your website. Like
so many others, it seems my wife and I will be ineligible to receive any of
the befits of the Home Buyer Tax credit. Here’s our situation:
Personally, I have never owned a home. However, my wife Karyn, purchased
her home back in May of 2004 when, at the time, we were dating. After the
lease on the apartment I was renting with a friend expired in May of 2005,
he moved out and bought a house, and I moved in with her. At the time, I
used my parents house as my official mailing address until we were married
in September of 2008, when I changed the mailing address to our current
home. Even though we have been married now for almost a year and a half, my
name is not on the title to our house. We felt that it wasn’t necessary
since we planned to move soon.
In late December of 2009, we put a contingent contract down to build our
first new house together with the assumption that we would be qualifying for
the $6500 long term home buyer credit since my wife has owned her house for
5 years.
Obviously, it seems as though we won’t be qualifying for anything because
seemingly I would qualify for the new Home buyer credit of $8000 and she
would qualify for the long-term Homeowner credit of $6500, which would
cancel each other out. Even if they looked at the fact that I’ve lived at
that house for 5 years, they fact that my name is not on the title means
that technically I don’t own it, so I we strikeout there too.
This is an extremely upsetting situation and simply unfair for most
newlyweds who have been married within the past 5 years. Is there anything
we can do? Do you know if there is a movement afoot to petition the IRS and
Congress to rewrite this legislation? Can we file a formal complaint with
the IRS? Would it help to contact our elected representatives and urge them
to revisit this bill? We’re willing to do whatever it takes along with
people who are in a similar situation as we are, to get this straightened
out for the benefit of everyone who is going through this injustice.
Let me know what we can do to help.
Thanks,
Jeff
Hi @Jeff, thanks for posting your story here, I appreciate it. Yes, there is something you and everyone else impacted by this can do. Get your friends to join the Facebook cause, so we can get that membership up. Keep telling your stories about how this is just simply unfair to married couples, and will rob the tax credit of any impact for the next four months. And stay tuned for updates, because there is actually something going on in the House right now that might remedy the situation. When we feel it’s time for public pressure, we’ll ask for it.
Like Joseph & His wife and countless others my husband & I do not qualify for either tax credit BECAUSE we got married 9/19/09.My condo which I have been in 7 years and owned for over 5 years.and he as a first time homebuyer cancel each other out. But my neighbor friend and her BOYFRIEND are buying a house under the same situation and THEY do qualify……..there is no common sense here. And as the President said in his state of the union message last night ..”we need to use some common sense “. Someone PLEASE help us . I have written my senator & representative but I think Washington is too caught up with politics and whether or not who is going to control the Senate & who is not that they have forgotten why we elected them to be there. This I am sure is an inadvertant oversight but if somebody wants to help the middle class ..this would go a long way…AMY & SETH
Hi @Amy and @Seth, thanks for posting your story. The silly part of this is that the tax credit is going to have an underwhelming impact on the real estate market if so many married couples are ineligible.
M wife and I are also victims of the penalty. I have owned my home since 1999. My wife has never owned prior to us
getting married in 2006 at which time she moved in. We are building a
new home that we will hopefully occupy within the next few weeks. If we
never got married and just lived together she would qualify for
first-time buyer and I would qualify for long-time homeowner. Thanks
government, way to discourage the American Dream! My marriage is worth
more than $6500 though so screw the damn lawmakers! We’ll be fine of
course since we weren’t counting on the extra money when we started
building but it sure would have been nice to build our kids a play area,
put in a swimming pool or whatever other purchase we would make that
would help to stimulate the local economy.
I am technically a 1st time buyer and my wife owns the place we are living at for 7 years. We got married last September and I could have qualified for an $8000 tax credit and she could have for the $6500 one. Because of these rules that I just cannot understand the basis of, we qualify to nothing. In our situation, we should qualify for half of each tax credit. We have our jobs and pay all the taxes. As mentioned before in this webpage, “we need to use some common sense”… if there is a true stimulus for the real state industry, why this “marriage penalty”????
I appreciate the work you are doing in getting to the bottom of the marriage penalty for the homebuyer tax credit. My husband and I are also being penalized for simply being married.
My husband bought a house and has lived in it for over 5 years. Nearly 3 years ago, we got married and I moved into his home. I have never owned a home before.
My husband, on his own, would qualify for the $6,500 tax credit. On my own, I would qualify for the $8,000 tax credit. Together, because we are married, we qualify for nothing.
It is very frustrating that married people are being penalized in this manner. We are looking to buy a home and a tax credit would help us out significantly.
Please let me know of anything I can do to voice our concerns over this penalization for being married…. writing our representatives, etc. Thank you for your research and work.
Hi @Michelle, thanks for the support. If you want to help, the best thing you can do is continue to get the word out, join our Facebook cause, and invite your friends.
Here is my story: Before I met my current wife, she had owned a home with her father who paid the mortgage payments. After I graduated college in 2006, I moved in to her house and we paid her dad rent. We have a baby on the way and wanted more room so we decided to look for a new house. I qualified for the $8000 first-time homebuyer credit, but, because we were married about two years ago, my wife canceled out my eligibility since she owned a home. So we were naturally thrilled when we heard that the tax credit was going to be extended to long-term/move-up homeowners like my wife. But the marriage penalty got us again since we both were required to have owned a home for the last 5 of 8 years. We feel stuck in the middle and hope that this oversight will get corrected. Thanks for raising awareness about this unintended consequence!
Hi @Jason, thanks for posting. You are EXACTLY the kind of couple that I think is most impacted by this — a recently married couple with mixed eligibility. Just an awful result from a dumb technical error in the legislation.
My wife and I have been married for 3 years. After we were married, she moved into my home which I have owned since 2002. She had never owned a home and had lived in an apartment during school. When our first child was born in 2008, my wife had to stay home to care for him due to his medical condition. We were planning on moving into a larger home once she was able to go back to work in a couple years but when rumors started to come out about expanding the tax credits we decided to move our schedule up a year. My income and our savings could support us until she returned to her job and so we sold our home and started to build our new one. In December, I found out about the “marriage penalty” and decided to not go ahead and finish the lower level. I was glad I had caught that nugget of info before giving the builder the go ahead but wonder how many people will discover this penalty when they go to file their taxes having “spent” the money already. I should qualify for the $6500 and my wife should qualify for the $8000 but only if we had not been married. I believe this oversight will really miss a key demographic that could best be helped with this credit. Additionally, by not finishing my lower level, I will not be helping provide revenue to the local economy and the skilled trades that would be required.
Hi @Jeff, thanks for posting. You’re exactly the kind of person we’re trying to help with our campaign on this.
Here’s my story. My mom bought a condo in June 2003 and included me in the title. We appear as Joint Tenants. She figured she was doing me a favor and that it’d help me out whenever I decided to buy my own home. I’m not on the mortgage though as she has made all the payments since I was making my way through college. In Aug 2008 I get married and we’ve been renting an apartment until right now. We’re in the middle of buying our first home and expect to close at the end of this month. My wife has never owned any property and would be a first time home buyer. I’ve technically owned property for the past 6 1/2 years, living at that property for 5 years, so I would qualify for the other tax credit. But alas we’re being punished for being married and my accountant told me today we’re currently out of luck. So we have a nice sized home to raise our infant son (and hopefully 1 more child soon) but now we can’t make the improvements we were expecting to make once we received one of the credits. So just wanted to share our story and thank you for your continued work with your campaign. I have just joined the cause on Facebook and my wife should be joining soon as well. We’ll keep our fingers crossed! Thanks again!
Hi @Marvin, thanks for joining the cause. Sorry to hear your story, but don’t lose hope that someone in the government will do something about this.
Just curious, with my wife and I qualifying for a different tax credit each and thus falling under the “marriage penalty”, what happens if for example just one name appears on the title of our new house? That person couldn’t claim whichever tax credit they’d qualify for on their own? Thanks.
Hi @Marvin, my expectation is that the legislation was worded to prevent this. The way it’s worded is that both the taxpayer (and the taxpayer’s) spouse have to qualify as a first-time or long-time home buyer. Whether only one is on the title does not matter.
My husband and I are in the same situation as many of you. We got married in 9/2009 and my husband has lived in our current house for over 5 years. I moved in with him; but I have never owned. So I qualify for one tax credit he qualifies for the other – yet we are disqualified for both. This makes no since and should be amended by the government. We should not be penalized for our marriage especially in this economical climate.
My wife and I are another example of the “marriage penalty” in action. When we were relocated due to my job back last year, we started looking for a new house. I had owned the house we were living in for over 5 years, and we were married 2-1/2 years ago – my wife having never owned a house on her own. Knowing we wouldn’t qualify for the $8000 new homebuyer credit, we were excited about the $6500 long term buyer credit when we went to sign our contract on our new home. Much to our dismay, we ran into this same brick wall – the “marriage penalty.” I suppose it should come as no real surprise anymore that our elected officials often do not uphold the institution of marriage, but to penalize “would-be” eligible working taxpayers for getting married is absurd.
My wife was divorced in early 2007. She and her prior husband owned a home together up and until the divorce. We met in 2008 when I was in graduate school. I graduated in May 2009 and we went to Vegas and got married. S0on after we decided to take advantage of the declining housing market, low interest rates and the tax credits to purchase a new home. I am the sole purchaser of the home as my income is the only one needed to qualify for the mortgage. I could file for divorce pro se with a filing fee of less than $90.00, enter in a Consent Decree, have the divorce granted in 31 days and buy a home on day 32 and live with my wife as a domestic partner and qualify for the credit (although we could not remarry until 2011, or the IRS would treat as married retroactively). Why is government discouraging people to marry and encouraging people to live together unmarried or divorce?
I don’t need a government handout. I am buying my house without the tax credit. It just sickens me that my tax dollars go to pay for this credit while at the same time I’m being singled out because I got married.
Hi @Justin, thanks for sharing your story. I’m glad to hear that you’re not getting divorced in order to claim the credit — that would be very un-romantic….
Here we are, two people penalized by the government because we got married. We have just gotten married in 08/2009. In Dec 2005, my dad had a stroke, so I decided I would buy over the house to help my parents, also it’s my principal residence. So I am only a few months short of the 5 years requirement for the long time residence move up credit. Because of that reason, we decided that my husband, who has never owned a home before, would be the only one to buy our new house that we have just signed the binding contract earlier this month. Together, we would not be able to qualify for either 8000 or 6500 credit. We were hoping that by filing separate, he’d at least get part of the credit for the first time home buyer. But now that we read more into it, we found out that we are not qualified for anything!. Had we waited to get married this year instead, he would file single and he can get 8000 credit. Why are we being penalized for being married. Not to mention that spending a load of money on the wedding is also a stimulus on the local economy as well.. And I thought the whole reason for all of this credit law was to help the economy.
Hi @Brian, I think you’re reading it correctly (note that you’re using the income limitations for the pre-November 2009 version of the tax credit, but it’s the same principal for the post-November 2009 credit). If a married couple is above that income limitation if they file jointly, but one of them would qualify (or both) if they filed separately, they might be advised to do that. That’s something they should check with their accountant.
I am buying a new house under my credit alone, to close by June 30, 2010. My wife has owned her Condo since July 2005. I have never owned a home. I just found out there was a marriage penalty yesterday. If I was single I would get the $8K slam dunk. But, since I am married to someone who does not qualify, it gets wiped out. For the move-up, she does not qualify because we have to close by June 30, 2010 and she would be a month (or so) short of the five year requrement. So the government has effectively screwed us out of this whole thing by marriage. Never have I been so angry at our corrupt, incompetent and irresponsible government. I also can’t believe how quiet these loop holes have been. Example, last night after finding this out, went onto Zillow.com and took their quiz on whether I qualify for the $8K first time home buyer credit. It asked me 5-6 questions which I answered honestly and it says I qualify. Not one question such as, are you married, what is the situation of your spouse’s home ownership, etc. You never see a caveat in any of the real estate sites in plan open sight, nor any politicians or the media talking about the loophole known as THE MARRIAGE PENALTY when it comes to the first time home buyer credit. It seems this little government gem is able to screw a large percentage of people who would easily qualify bt for being married to someone who is not. UNBELIEVABLE.
Hi @Greg, thanks for sharing your story. It really is a shame, and it’s disappointing that sites like Zillow have not picked up on the issue, and are still using such a superficial eligibility test.