UPDATE April 13, 2010: This post 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).
Some recent questions from visitors to HomeBuyerTaxCredit.com have brought up a new type of “Marriage Penalty” that we had not considered before. To remind you, we’ve started a campaign to challenge the IRS interpretation of the Home Buyer Tax Credit, which we’ve said creates a “Marriage Penalty” against married couples by rendering them ineligible to claim a tax credit in situations where an unmarried couple could claim a credit. We’ve previously identified three types of marriage penalties:
- Where one spouse qualifies as either a first-time home buyer or a long-time homeowner, but the other spouse does not qualify for either.
- Where one spouse qualifies as a first-time home buyer, but the other spouse qualifies as a long-time homeowner.
- Where both spouses qualify as long-time homeowners, but for different principal residences (i.e., they both lived in a home they owned for five consecutive years out of eight, but for different residences.
Based on questions from readers, we’ve now discovered a fourth potential type of marriage penalty: where a married couple has lived and owned in a home for five consecutive years out of the last eight, but only one spouse is on the title to the home. Continue reading
