We finally got confirmation from the IRS about the Fourth Type of marriage penalty that we’ve discussed on this blog. I just had a conversation with a Mr. Schriber from the IRS, ID #0571682, who has confirmed for me the following: if a married couple has lived in a home for five consecutive years out of the last eight, but only one spouse is on the title to the home, the untitled spouse qualifies as an “owner” for purposes of satisfying the ownership history requirements of the long-time homeowner home buyer tax credit.
This is very good news. We’ve gotten probably a dozen questions on the Questions section of the blog from people who are in this situation, which makes sense given how likely it is that a couple would get married after one spouse already owns a home, and then live in that home for a long period of time. Although the legislation literally requires both spouses to be owners of the property, the IRS imputes ownership from one spouse to the other, which is something we speculated about when we initially discussed this issue.
We will be updating the various blog posts about this issue, and trying to find all the questions about this issue so we can let people know the good news. That said, nothing about this changes the other three types of Marriage Penalties, which prevent a married couple from qualifying for the tax credit if one spouse is ineligible, if the spouses are eligible for different types of credits, or where both spouses are long-time homeowners but for different residences. To change that, we’re going to need Congress to pass the legislation drafted by Congressman Engel.
My thanks to Mr. Schriber for clarifying this issue for us.
Hi,
Thanks for the update. Can you help clarify my situation for me. I purchased my home in August of 2000. My wife moved in with me in December of 2003, she has never owned a home. We were married in November of 2006. We just sold our home in February this year(2010). Only my name was on title to the house. I had owned and lived in that house for over 9 years, but being that we only lived in the home for 3 and a half years as a married couple, does this mean we still would not qualify for the long time homeowners credit?
Thanks,
Barry
Hi @Barry, the information we just got from the IRS indicates that you would qualify, but you might want to call them yourself just to make sure.
With regards to Barry’s comment, even thought they weren’t married for the full five years, they would qualify? Just the fact that they were living together is enough to qualify? Very curious as my wife and I are in a very similar situation. I’ll have to give the ol’ IRS a call!
Thanks,
Carl
HI @Carl, thanks for posting. We’ve gotten a lot of questions about this, and do not yet know the answer. We will look into it. More here.
This is great for those who bought their home before meeting the love of their lives. I’m glad the IRS has decided not to penalize them for being frugal and thinking of the future.
Joseph –
I have almost the exact situation as Barry listed above. I bought the house in August of 2004, my wife (girlfriend at the time) moved in with me in October 2004. We were married in June of 2006. We sold our home on 3.31.2010, entered into a contract to purchase a new home in January 2010 and will move into/close on that home in June 2010. We were thinking we qualifed for the repeat buyer credit then started hearing about the marriage penalties. I believe our situation falls under the previous 4th marriage penalty even though we have only been married for just shy of 4 years. You indicated to Barry that he should contact the IRS. What is the best way to do this? Was this scenario presented to Mr. Schriber?
Hi @Chad, we’re looking into that now. We just posted something about this issue.
this would only work if you had been married for the entire 5 years right? We just realized that although we’ve lived together in this house for 10 years, we will have only been married 4 years 10 months when we close on our new home.
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Hi @Joseph,
I see you have gotten quite a few follow ups to my original question on this post. As a follow up I contacted the IRS last week and spoke with a Ms. Gandy, ID# 0247140. She proceeded to ask me a series of questions, approximately 20-25, to see if I qualified. When I tried to get into further details on who was on title and how long we were married she did not want to know. She told me the IRS does not care how long I was married, they just needed to know if I was married now. They also did not care how long I had owned the home. Based on my answers to all her questions she told me that I did in fact qualify for the $6500 credit. My wife and I are sending in an amendment to our 2009 taxes this week along with the 5405 form, the HUD-1 from our closing, and 5 years of property tax records on our former home. I am hopeful to see the $6500 in my mailbox in the next 3 months or so. I will let you know if I receive it.
Thanks,
Barry
Hi @Barry, congratulations! That’s great news. I got the same confirmation today from a different person at the IRS. (I didn’t have to go through the 20-question test, because I told her I’d been through it last week when I called for something; she finally agreed to just answer my question in the abstract rather than the specific). I thought the IRS was pretty helpful, scripted responses aside, and I agree that it seems like the IRS only cares about how long you lived in the property, and whether you’re married currently.
Just an update to my previous post. The IRS did care about how long I owned the home. I meant to say that they did not care that only I was on title, and my wife was not.
Thankyou so much for the update.. Especially because that makes my husband and I eligable for the tax credit.. Once more thanks, Nancy
YES!!!!! Thanks Joe!!! My CPA agreed with the IRS but it is nice to have offical confirmation. Thanks for all you help with this!!!!!
Thank you so much for this site. I have learned a lot. My situation is this: My husband has lived in his home for 15 years. I moved in the home 2 1/2 years ago after selling my first home that I owned for less than 3 years. I am not on the title. We are now closing on a new home within the deadline. Does my situation disqualify us from claiming the $6,500 tax credit? If so, talk about a marriage penalty!
Hi @Lori, thanks so much for your kind words. This is a tricky one. Your husband qualifies, since he has lived there for more than five consecutive years out of the last eight. You are married to him, and have lived with him for over two years. The IRS has said that it will impute ownership to a non-titled spouse, but indicated that the non-titled spouse had to live in the home for five consecutive years out of the last eight. That would make you, sadly, ineligible. But it might be that the IRS will simply impute ownership to you now, and not track back to see how long you’ve lived there. They’ve been confused on this issue from the beginning (indeed, my inquiries on this have led to clarifications that they’ve sent out internally), so they might not even know how they’re handling it. Try calling them and explaining your situation, see what they say.
Joe this is dizzying and my wife and I can’t even agree as to which ‘Type’ we fall into let alone whether we will see the tax credit!
I owned and occupied my home for at least 5 years. I married 2 yrs ago and we just bought a home.
My wife is not a 1st time home buyer, did not live with me prior to our marriage and did not own her prior residence for 5yrs.
Does my marriage disqualify me (sorry honey “us”)?
Hi @Sean, good catch in that last bit….
Unfortunately, you guys do fall into the Marriage Penalty. You qualify as a long-time homeowner, she qualifies as a first-time home buyer, but the IRS requires that you both qualify for the same type of credit. And, yes, if you were not married, you could share an $8,000 tax credit to which she’d be entitled as a first-time home buyer. Very unfair.
Joe, My wife and I were married in 1998. We bought a house in 1999, only my wife was on the title. We lived there for almost eleven years. We sold the house in March, 2010 and purchased a new home in April, 2010. Do we qualify for the long time resident $6,500 credit?
Hi @Mike, it looks like you do. You’ve been married for more than the last five years, and living together in the home for longer than that. In that case, your wife’s ownership is “imputed” to you for purposes of the credit. At least that’s what the IRS told me about this.
So, I am still right in thinking that because I owned and lived in my house for 5+ years, but my husband has only lived there for 3, that we still don’t qualify? (we’ve already sold my house and bought another, and we were in contract before April 30 and we closed before June 30). I hadn’t even met my husband 5 years ago, so obviously him living there that long would have been odd. We’re still SOL?
P.S. My husband actually owns his own place, and has owned it for longer than 5 years, but he rented it when we moved in with me. So this isn’t considered his primary residence.
Hi Kerry, yes, it looks like he has to have lived there with you for five years in order to qualify. It doesn’t make any sense, but that’s what the IRS is saying.