UPDATE 3.09.10: We have added the video we made about the Marriage Penalty.
UPDATE 4.13.10: The video references a “Fourth Type” of Marriage Penalty questioning whether a married couple would qualify for the Home Buyer Tax Credit in situations where the couple has lived in a home for the requisite five-consecutive-years-out-of-eight period but only one spouse is on the title to the property. The IRS has now confirmed for us that in those situations, ownership by one spouse would be imputed to the other spouse, so those couples would indeed be eligible for the Home Buyer Tax Credit as long-time homeowners (assuming they otherwise qualify).
We know that a lot of you have been following our coverage of the “Marriage Penalty” in the Home Buyer Tax Credit, particularly those of you who have been affected. We wanted to give you an update on two fronts:
First, we have put together a “Special Report” on the Marriage Penalty, which summarizes and reorganizes everything we’ve written about the Marriage Penalty in the Home Buyer Tax Credit. We thought it would be helpful as a document to send out to people who might be interested in the issue, particularly for your Congressional Representatives so that they understand the issues presented.
Second, and more importantly, we have a bill — H.R. 4701! Congressman Eliot L. Engle, the Representative for the 17th District of New York (and, in fact, my Conressman) has drafted a bill to fix the Marriage Penalty and is circulating it among his colleages on the House Ways and Means Committee. We have no idea if this bill has any chance of passage, but we are hopeful that our Congressional leaders will see that the impact of the Home Buyer Tax Credit will be severely undermined by the Marriage Penalty.
If you want to get involved, here’s what you can do:
- Join our Facebook Cause, which is now up to 250 members. We’re not exactly “Farmville,” but it’s something….
- Send a link to HR 4701 and to our Special Report to your Congressional representatives and tell them that you support fixing the Marriage Penalty.
- And post the bill and our Special Report to your twitter accounts, facebook, anything you do that can get the word out!
This is the first sign we’ve had that this might actually change. So let’s act on it.
This is GREAT news!! I have passed this information along to my Congresswoman, Rosa Delauro of CT, who I have already previously written concerning this matter. Lets hope this Bill finds the support it needs in Congress.
Thanks for all your help in getting this matter fixed.
Barry
Awesome news, time to really turn up the heat!!!
This is great news! Maybe they can slip this into the healthcare reform bill…at least that way SOMETHING positive can come out of it. I wrote to my Congressman Ander Crenshaw of Florida to ask for his consideration and support of the bill.
Thanks!
Stephen
If this is passed, it would seem that Congress is admitting that the original language left out certain married couples from the beginning. Why would this amendment be effective on purchases after the passed date and not for the entire time (after November 6th)? My wife and I purchased our home in January under the assumption that we would qualify for at least ONE of the tax credits. I qualifed for the $6500 and she qualified for the $8000, but, as we read the details on the IRS website after our purchase, we realized that we canceled each other out. We were thinking about buying a house and the thought of the tax credit just pushed us over the edge (wasn’t that the purpose of the credit?). But since the language was screwed up the first time and could possibly be fixed in March, we are caught in the middle. Thanks for your efforts anyway. I hope some newly married couples will benefit from this even if we cannot.
Hi @Jason, my legislative interpretation skills are a little rusty, but I believe that the final section of HR 4701 makes it effective as of the date of the “enactment of this Act,” which might mean the initial enactment of the Act, not the amended bill. But I’ll check on that.
One step closer!
we have contacted 2 of our Ky congressmen with this info and the bill presented to Ways & Means…there are 41 members on the Ways & means and BOTH of our representatives are on that committee
Here is a portion of a letter my wife and I sent to our district representative…
Honorable –representative’s name–,
This email letter is in regards to the Homebuyer’s Tax Credit and how this
legislation affects married individuals.
My wife and I recently learned that the IRS interpretation of the Homebuyer’s
Tax Credit may make us ineligible to actually receive such a credit due to our
being married.
Here are the apparent facts behind this situation
1) My wife is a long time homeowner (>8 years at residence).
2) We were married ~3 years ago, I moved and have been living with her at her
home since then (title in her name).
3) If I were not married, I would qualify as a first time homeowner.
4) If she was not married, she would qualify as a long-time homeowner.
5) Under the IRS interpretation of the Congressional legislation, a married
couple (that individually would qualify) would not receive a credit.
The IRS interpretation of the Congressional legislation for married couples does
not make sense to us. In fact, the IRS interpretation seems unfair and
discriminatory.
Further,
6) If we were “partners” instead of being married, we would qualify.
7) If as “partners” one has long-time homeowner status and the other as a
first-time homebuyer, they would receive in total the $8000 credit. If they were
instead “married”, they would receive no credit. Why?
8) As a married couple, we must have the same type of tax credits to qualify.
E.g. both long-time homeowners or both first-time buyers. But not a mixture.
This is absurd.
I have a hard time believing that the intent of Congress was to penalize married
couples.
But at the same time, I find it unbelievable that such an oversight in the
drafting of the legislation had occurred for a very common situation.
If there is a rationale for such a penalty, I’d be very interested in
understanding and discussing this issue with your office.
We are currently interested in purchasing a home and are interested in utilizing
the Home Buyer Tax Credit. However, current IRS interpretation seems to indicate
we’d have to annul our marriage and purchase the home as “partners” to receive
the credit.
Please help us understand this situation and what congress and your office is
doing to rectify this situation for married couples. Please help us understand
how this interpretation affects couples looking to purchase homes now, within
the tax credit deadline and under the current legislation.
Thank you. We appreciate your time and consideration and we look forward to an
on-going dialog with your office.
Best regards,
Nina and Jay
Hi @Nina. Wow, that’s quite a letter. Let us know if you get anywhere with it.
It has been nearly a month since first contacting our local representative (Somerville, MA) regarding the marriage penalty. As of today, we have received zero response.
Normally, I’d expect to receive either a form letter response or a notation that the office was investigating the issue. However, in this case, it appears that this particular office may ignoring requests for dialog by essentially “taking the phone off the hook”.
Maybe this representative is on the “wrong” side of the fence. Or, maybe the staff is overwhelmed bailing out the big guns in the banking industry.
Whatever the case may, we plan on stepping up of efforts to communicate with our representative in the coming weeks.
Thank you very much for your blog and your efforts in communicating this issue to masses. We will update you on our personal progress.
Best regards,
Nina & Jay.
My wife and I have just run into this problem. I wrote Congressman Earl Blumenauer and Senator Merkley to try and get assistance. Here is what I wrote:
Dear Congressman Blumenauer,
I am writing to bring attention to a loophole in the current Homebuyer Tax Credit which I believe unfairly penalizes married couples. My wife and I have recently purchased a new home. My wife owned and lived in a house for the past six years and would normally qualify for the second time home buyer tax credit of $6500. I have never purchased a house and would normally qualify for the first time home buyer tax credit of $8000. However, my wife and I married under two years ago and due to this we apparently do not qualify for either tax credit. I understand and agree that we should not qualify for the $8000 tax credit, but I am dumbfounded and disappointed we don’t qualify for the $6500 tax credit.
Our goal was to purchase another house that would be better suited to begin to raise a family. The tax credit was an added incentive to try and make our dream come true. To our dismay, we have recently discovered this credit is unavailable to us simply because we decided to get married.
Congressman Loebsack of Iowa’s Second District is also aware of this problem and has written a letter to Speaker Nancy Pelosi urging her to revise the law. I urge you to please support his efforts to amend the tax credit law.
Thank you for your time and your hard work.
Hi @Joe, great job, thanks!
We are another married couple who cannot qualify for the homeowner tax credit simply because we are MARRIED. My husband has lived in his home for 10+ years. I moved in with him when we got married 4 years ago. I also owned a home prior to moving in for over 10+ years. When I moved in with my husband I rented out my prior home which I have not lived in for over 3 years. As individuals filing seperately or as live-in partners I would qualify for the new home buyer since I have not lived in my prior home and it has not been my principle residence for over 3 years and my husband would qualify as a long time home buyer since he has lived in his home for at least 5 of the last 8 years. We recently bought a home in December 2009 and were hoping to use the money to fix the home up since it was a foreclosure. Now because were married we are being penalized. I really hope the new tax law rules are amended to help all the married couples who would otherwise qualify for the credit. I have emailed my state senators and representatives with your link and asked them to support the new bill H.R. 4701. Thanks,
Joe,
Here’s another situation that is a variation on what you are calling type 4 marriage penalty. I will have been a homeowner for 5 years. My wife has been living in the house for 4 years. So far this is your standard type 4 marriage penalty.
Here’s where it is different. She originally was not on the title. However, we refinanced the mortgage a year ago and when doing so we put her name on the title as well.
This could be interpretted as her 5 year clock as a homeowner started just a year ago, when we refinanced and her name was added to the mortgage. We were told at the time that there was no disbenefit in having her name on the title.
The long-time homeowner policy needs to be restated to cover this situation. A couple should not be excluded because of what they thought was an inconsequential decision of adding the other spouses name to the title during a refinance.
Aside from this, the whole 5 year criteria is ridiculous anyway. People who purchased their homes at the height of the market in 2006 are not qualifying for this credit. In my mind, this is a major issue that should be brought back before Congress.
Here is our story…I have owned my home for almost 8 years and my husband has owned his for over 5. When we got married 2 years ago, he moved in with me and I added him to the title a year later when we refinanced. When we couldn’t sell his house for 8 months, we rented it to a couple who lost their house and caused part of the foreclosure mess! We take a monthly loss on that property, propped up the housing market, and helped people who made dumb mistakes and we DON’T qualify for this trax credit? What nonsense! We have a contract on a new house, but will either get divorced before close or back out if that is what we have to do! OR better yet, kick out our renters and walk from that mortgage?? Way to go congress! Way toupport marriage and those doing the RIGHT thing!
Here is our story:
1) My wife is a first time homeowner.
2) I am a long term home owner (>5 years)
3) We were married 1 year ago, and she has moved in with me.
4) We are now very happily expecting our first child and need to find a larger home.
5) If she were not married, she would qualify as a first time homeowner.
6) If I was not married, I would qualify as a long-time homeowner.
7) Under the IRS interpretation of the Congressional legislation, a married
couple (that individually would qualify) would not receive a credit.
This is crazy! I’ve written my representative as well using https://writerep.house.gov/writerep/welcome.shtml
We wrote our congress rep! Let’s get this off the ground before it’s too late!
Pingback: There is no “Fourth Type” of Marriage Penalty: Confirmation from the IRS that an untitled spouse qualifies as an “owner” for the long-time homeowner credit « Irvine/Corona Real Estate Weblog
Is this a dead issue? We close on our house tomorrow, and I just found out today that because I got married two years ago instead of five, or not at all, we no longer qualify for the tax credit. even thought I’ve owned a home for over 9 years and my husband lived with me for 6 of those years. We got married in 2008 and apparently that was our mistake! So unfair. Is there any update on the bill or getting this fixed???
Hi @Miss, we haven’t had an update in a while. It doesn’t look like Congress is going to take this up. For some reason, no one seems to recognize the unfairness of all this.
Hi…we just got our certified letter from the IRS today…my husband of 2 yrs and I do not qualify either because we got married in June 2008 and I owned my home since 2001. We did not live together until we married and my husband has not owned a home in more than 3 years…but since we are married now, we cancel each other out! This is INSANE! What a slap to a cornerstone of our society – marriage!! We were counting on the credit to repay a family member who helped us with the downpayment and now will have to wait longer to start our family…thanks OBAMA!
Hello,
There is an issue you may or may not be aware of with the Facebook page. I could not join the cause. I noticed the membership is now 450. Is there a limit? I think once all the “rejection” letters from the IRS are sent, the **** will hit the fan regarding this huge fiasco!