For much of 2010, we answered reader questions about the Home Buyer Tax Credit in this space. With the tax credit deadlines having passed, though, we will no longer be covering new questions. If you have a question, make sure to check our our Home Buyer Tax Credit information site, which has videos, overviews, an FAQ, and an Eligibility Test. Also, you can look through the questions already posted to see whether we might have addressed a similar issue.
And please remember that we are not accountants, nor are we intending to provide accounting advice. You should always consult your accountant regarding filing your taxes, and making decisions to purchase a home with the intention of claiming a tax credit.
I am trying to see if there is a reduced tax credit for repeat home buyers in my situation. I purchased my home and have been living in it since July 31, 2005. Nice right. I since have taken a job that is a long commute and would love to buy a new home closer to work. Unfortunately A) I will have to eat about 5k to 10k if I sold my home and B) I appear to be 1 or 2 months short of the 5 year (60 month) requirement to qualify for the $6500 tax credit. I have read that the first time home buyer $8000 tax credit just drops by $2000 per quarter if you do not meet the deadline of April 31, 2010 (signed contract) and June 30, 2010 for closing. You would get $6000 tax credit if you just missed those deadlines (a few days or so). Question 1: Is that accurate? Question 2: If so, is there a similar step down for the $6500 repeat buyer credit?
Thank you for your help in advance. I’ll also, contact the IRS tonight to try to get that answer as well.
Hi @Scott, sadly, you’re right that you’re a few months short of qualifying. As far as we’ve seen there’s nothing in the law that phases out the credit over time — nothing that would allow a partial credit if you close after June 30, 2010. If that changes, we’ll let you know, but it sounds like you got some bad information.
Hi I am in the process of buying a home me and my sister a going to be on the loan but she already has a home will i be able to get the tax credit even though shes on there?
Hi @Marilu, thanks for posting. I have good news. Although you need to qualify under the other requirements, the fact that your sister is on the mortgage will not affect your ability to claim the full credit to which you’re entitled. If you’re interested in finding out more, we have a video that addresses this. Check it out here.
I have a client that is legally seperated. His wife has refinanced the home, He is no longer on the note and he has quit claimed his interest to her. I am under contract now on a new home and will close by June 30. Legally seperated but not finalized in the divorce. I he eligible for the step up tax credit. He has live in the home 5 out of the last 8 years.
Hi @John, if he lived in the home for five consecutive years out of the last eight, and was on the title, then his ownership history qualifies as a long-time homeowner. He still has to qualify under the other requirements, of course, but he qualifies on ownership history under those facts.
I will be in my home 5 years after April 30 but before June 30. If I am under contract by April 30 on my new home and close after my 5 year anniversary, but before June 30, do I qualify if so otherwise?
Hi @John. Yes, so long as you are in your home for five consecutive years out of the last eight before you sell it, or before you close on your new qualifying home, you would be eligible (so long as you otherwise qualify).
To qualify for the $6500 for selling one home and buying another, does the newly purchased home have to be new construction? We are looking at a four-year-old home. Will it qualify for the $6500? We meet the other requirements.
Hi @Don. No, the purchase does not have to be new construction, nor does it have to cost more than what you’re selling. If you meet the other requirements, you qualify.
Does the home buyers tax credit have to be repaid or does it have to be claimed as income?
Hi @Glynn, the tax credit does not have to be repaid unless you move or sell within three years of your purchase. The credit is not “income,” so I’m not sure what you mean by that. You would claim the credit as an offset against whatever taxes you owe.
If I qualify for the first time homebuyers credit, live in my home for 1 year, move out and convert my home to a rental, what happens to the credit that I received?
Thanks
Hi @Mark, you’d have to pay the whole thing back. You have to stay in that home you purchase for at least three years. If you convert it, you have to pay the whole thing back.
My husband and I purchased mobile home in Florida July 2009. Together our income total $180,000. Our accountant said we made too much. I see you website says upto $225,000. Can we still be eligible? Husband earned $126,000 and house is in his name only.HELP
Hi @Debbie, I’m afraid your accountant is correct. At the time you purchased, the income levels were lower than they are now, and $180,000 is above the income levels. Your purchase is covered by the tax credit that was in effect as of July 2009, which you can see in our “History” section here.
I sold my home in December of 2006. My husband is still on his former home with his ex-wife. We bought a house together in June of 2009. I think we both qualify for long-term homeowner credit. But are we disqualified because of the time-frame we bought (i.e. too early)? Thank you!
Hi @Valerie, I’m afraid you would not qualify because you purchased in June 2009, before the long-time homeowner credit was enacted. It doesn’t matter how long you lived in your old home, or your husband’s situation.
Scenario: Three single individuals who would indivually qualify for first-time homebuyer tax credit are purchasing a 2-flat building in which all three will be occupying one unit, the other unit will be rented. The purchase price is $150,000.
Question 1: Is the credit 10% of $150,000 for a maximum of $8,000 or is it 10% of $75,000 (i.e. $7,500)?
Question 2: Can they share the credit equally eventhough their contributions toward the down payment were not equal?
Hi @Sami, thanks for posting. In answer to Question 1, the IRS will apportion the purchase value according to how much of the home you’re living in. So in this case you’d be living in 50% of a $150,000 property, so the “home” you’re buying is a $75,000 home. 10% of that is a maximum credit of $7,500. In answer to Question #2, they can share it however they like, if they are all eligible; it doesn’t matter how much down payment money each buyer is putting down.
Will the IRS process the 5405 form if the HUD 1 statement has not been signed by the seller (FannieMae)
Hi @Sandy, the IRS has indicated that it is going to be strictly reviewing tax filings relating to the Home Buyer Tax Credit, and does also indicate that it’s going to want to see the HUD1 signed by the seller. Have you already closed, and the seller neglected to sign the HUD?
Can a buyer purchase a home on a lease to purchase contract signed by April 30th,2010 qualify for the tax credit.
Hi @Anita, thanks for posting. I don’t know the answer to that, and it may depend on your state laws regarding how lease to purchase contracts work. My guess is that you would need to take actual title of the property, though, to satisfy the Home Buyer Tax Credit statute.
We refinanced our home, do we qualify?
Hi @Deni, no, sorry, the tax credit only applies to purchases, not refinances.
Hi. I have a client who has a friend that is going to purchase my client a home (temporary financial issues). My client qualifies for the $6500 credit in every other way and will be living in the home and making the payments. He will not be on the mortgage but could be put on the deed/title if that helps. Does he qualify with his friend purchasing the home for him?
Hi @Pam, it doesn’t matter who is on the note, only who is on the title. If your client is on the title, then he is the owner of the property and is eligible for the tax credit.
my question is i am a us citizen but my wife is not, will we still be able to qualify? this will be our 1st home, we are currently renting.
Hi @Pable, is your wife a legal resident? If so, you probably qualify, although you might want to check with an attorney and accountant about it. The only restriction in the law, though, is that nonresident aliens do not qualify.
Hi,
I’m a first time home buyer interested in a short sale, but realize that the process is very lengthy. If I’m not able to be under contract until after April 30th, but will close prior to July 1st, will I still qualify for the tax credit? Thanks!
Hi @Al, thanks for posting. I would be concerned about purchasing a short sale and being able to get into contract and close on time. It’s definitely a challenge, but if you have a good agent who knows how to work on short sales, and a listing agent who can prepare a strong short sale package for the lender, it’s possible. You’re obviously looking at short sales with the idea of saving on your purchase price, so you might consider whether it’s worth it even if you don’t get the credit (i.e., if you save $15,000 on the price because the lender is willing to take a short sale, you will be better off than buying a similar house at a higher price point and getting the credit). It sounds like you’re aware of the risks, which is the important thing. The problem won’t be getting into contract, by the way, since the legislation does not seem to define what it means to be in contract, so even the contract you would sign with the seller pending approval by the bank would probably suffice (but check with your lawyer about that). The key will be getting lender approval of the short sale and closing by June 30th. To answer your specific question, you have to be BOTH in contract by April 30 and closed by June 30.
I meet all the qualifications for the home buyer credit; however, my grandparents are loaning me money to purchase my new home in cash. I am putting 20% down. Do I qualify for the credit?
Hi @Mark, thanks for posting. If you otherwise qualify, it doesn’t matter where you get your money. If you’re the one on the title, you’re the one who gets the credit.
My husband is AD Army and we are trying to buy our first house during his deployment. I read somewhere that for military the tax credit is extended by a year is this accurate? Also is there any way to negotiate with a bank to accept an offer faster (not a short sale)? thanks
Hi @Lisa, that’s absolutely true. For military personnel, there are two changes to the fundamental tax credit rules. First, you can get a one year extension on the deadline to get into contract and to close. Second, you don’t have to pay the credit back if you move for military relocation within the three years after you close. Try taking our eligibility test to see if you qualify.
As for banks accepting offers, that’s a pretty standard complaint. Best advice we can give is to be persistent and pleasant, and recognize that the person you’re talking to today might not be the person you talked to last week.
Hi! I am a permanent resident and bought my first house last December in US, assuming that I will be eligible for the first home buyer credit. But I just realized that I have owned a house in Hong Kong, which I have not lived in for a long time. So I’m just wondering whether I am still eligible for the credit or not. I wonder if you have an answer. Thanks!
Hi @Chen, if you didn’t live in the house that you owned in Hong Kong within the past three years, you should still qualify as a first-time home buyer. If you’re otherwise eligible, you would be entitled to a tax credit.
I signed a premarital agreement acknowledge my husband separate property and not being on the deed back in 1997. In May 2008, my sold the property in which we lived in and bought a new home. In June,2009, we refinanced and at that time, my name was put on the deed….am I eligible for a homebuyer tax credit? My husband refinanced getting a lower interest rate in which we both were able to qualify for the tax credit for this. Thank you.
Hi @Susan, if I follow this, you sold property you lived in in 2008 and bought a new home at that time. If you bought a home in May 2008, the only tax credit available at that time to which you’d be entitled would be for first-time home buyers, but at that time you had both owned property previously (within the previous three years of May 2008). Accordingly, I don’t see how you’d be eligible for a tax credit.
Hi,
My wife and I are both first time homebuyers and want to buy my grandmother’s house. My grandmother passed away this month so we are not going to buy it directly from her but from her estate. Will we qualify to get the $8,000.00 credit?
hi @Lisa, thanks for posting. Sorry, we just don’t know whether the IRS will treat this like a purchase from a relative (no tax credit) or from an estate (get the credit). I will say, though, that it seems unlikely that your grandmother’s estate would resolve so quickly that you’d be able to close by June 30th. My condolences for your loss.
Hi,
I owned a house for 11 years in my name. I got married and my husband has lived with me in that house for 11 years. I sold the house July 2009. My husband and I went to contract on a new home construction in June 2009. We expect to be in our new house the end of May 2010. The will be no mortgage. The money for the house has been in escrow and taken out as the house is being built. Can we still quality for the step-up credit? The title company says they can provide some closing statement then. Thank you.
Hi @Karen, you seem to be asking a question about the construction issue, but you also have a marriage penalty issue. With regard to construction, you need to be in the house and moved in with a legal certificate of occupancy (or similar legal occupancy) by June 30th, with whatever you can pull together by way of documentation that will support the fact that you purchased the home and moved in by the deadline. The other issue for you, though, is whether you and your husband will qualify as long-time homeowners if you were the only one on the title. Even months after making the request, we’ve gotten no clarification from the IRS on the issue as to whether a married couple where only one spouse owns the home that both of them lived in qualify as long-time homeowners, since the non-owning spouse did not actually “own” the property. You should make sure you review our posts about the “Marriage Penalty” here on the blog.
My question: Existing home owners – building a new house – completion/closing should be in June. Income qualifications met. What is meant by “under contract” by 4/30/10 ? Would our construction loan contract met that requirement? Or do we just need to met the June 30, 2010 final closing/occupancy requirement?
Hi @Carol, if you do not have a standard contract because you’re building the home yourself, the key date is the June 30th closing/occupancy date. You have to be moved in by that date to qualify.
My wife and I owned and lived in the same home for 5 years. Due to work relocation, I am buying a new home in another city. I will be living there as my primary residence, but my spouse cannot move yet because of her job situation. Can I claim the $6500 credit without a penalty if she does not immediately move in? If so, is there a timeframe within which she must move in? Thanks!
Hi @John (if that’s your real name…..), thanks for posting. I’m going to assume that you and your wife qualify under all the criteria, and the only outstanding issue is whether your wife’s living in your prior home after you purchase will impair your ability to claim the credit. The legislation indicates that you have to live in the property for three years following the purchase, and seems to presume that residency would commence immediately upon purchase. So it might be that you and your wife should claim your new home as your legal primary residence, even if she is essentially commuting from there to her current job. This is, though, something you should check with your accountant, because it’s so fact-specific and runs right close to the line of what the legislation allows.
Hi!
What is the legal meaning of moved in by 6/30/10. We live in Alabama, moving to S.C. and the home need soe fix up which might take up to 6 months. Can I as husband move in, take rersidency and do needed repairs then sell our existing and move my wife?
Thanks!
Hi @Michael, thanks for posting. The move-in date by June 30th has to do with new construction, if you’re building the home yourself. If you’re buying a resale, you just have to close by June 30th. That said, the law does require you to live in the home for three years following the closing, so you’d need to establish some form of residency in the home, even if you lived there while doing work on the place. This can be a little complicated, so I advice you to speak with a local attorney or accountant to see what you need to do.
My husband and I sold our primary residence that we had lived in for 8 years – we moved into one of our rental homes since 7/09. We are purchasing a new primary residence now and wondering if we qualify for the $6500 tax credit.
Hi @Nicole. You don’t give me quite enough information, but if you and your husband both owned your former residence, and you lived in it for eight consecutive years leading up to the sale in July 2009, then your ownership history would qualify you as a long-time homeowner. But you’d both have to be owners of the property, and you’d both have to qualify under the other criteria, as well.
Does the tax credit work for a second home?
Hi @Susan, the answer is no, the tax credit is only available for a primary residence.
This has been covered in some detail on your website already, but I just wanted to clarify. Since the credit is phased-out over a $20k range (i.e., $170k-$150k = $20k) for married couples filing jointly just as it is for all others (including married couples filing separately, i.e. $95k-$75k = $20k), wouldn’t it very often be advantageous for married couples to file separately in order to get this tax credit. For instance, under the original tax credit (pre-Nov. 6th) income limitations, two married people could each make $85k and be unable to take the credit at all if they file jointly (combined income of $170k), but able to each take half of the “half-credit” if they file separately (they are each halfway through the phase-out range of $75k-$95k and can therefor each take 50% of the $4k credit available to them). It’s strange to me that the govt. didn’t phase-out the married filing jointly credit at exactly 2x the married filing separately range (i.e., I would have expected it to be phased-out from $150k-$190k not $150k-$170k). Am I understanding this correctly? Wouldn’t this lead alot of people who fall in the joint $150k-$190k range to file separately?
I sold my house in Dec. 2007. Do I qualify for the tax credit?
Hi @Ed, the tax credit only applies for purchases, not for sales. If your question is whether you qualify as a first-time home buyer since you haven’t owned a home since December 2007, then the answer is unfortunately no. You cannot have owned a home you lived in for three years prior to closing. Since the expiration is in June 2010, that would be fewer than three years since you sold.
we inherated the house we lived in for 15years. my husband was on the title of the home i was not. but we lived there together . we sold the house and moved bought another home to we qualify for the credit
Hi @Dawn, we see this question again and again, the issue of whether a married couple consisting of one spouse that is on title, and the other spouse who is not on title but lived in the house for a long period of time, qualifies for the tax credit. This is the “Fourth Type” of marriage penalty, and we’re still waiting for IRS clarification of this issue.
my question is my husband and i have been married for 10 years we bought our house 6 years ago. he is the only one on the loan due to the fact i was not workinfg at the time so i could not be on the loan which makes him the only one on title but we did buy the house together and have been filling our taxes to gether for the past 10 years and 6 with the house. does that make us eiligable since we have been married for 10 years and bought the house married and both have lived in the home the same amount of years.
Hi @Nancy, thanks for posting. I want to point out that the fact that your husband is the only one on the LOAN does not mean that he is the only one on the TITLE. You should check that. If you are on the title, then you both would qualify (at least on ownership history) for the tax credit as long-time homeowners. If he is indeed the only one on the title, then you might fall into what we’ve called the Fourth Type of marriage penalty (where only one spouse is on the title, but both spouses have lived in the home). We’re waiting for IRS clarification on the issue of whether your husband’s ownership imputes ownership to you. Check out our commentary on the marriage penalty here.
I have a question: before my husband and I married, he purchased a home (was on title alone) with his ex-wife in Feb 2006. They were unmarried at the time. He lived there until Feb 2007, and no longer used the home as his primary residence thereafter. He quit claimed the deed to her in July 2008, and they divorced in Aug 2008. We purchased a home in Feb 2010. I am a first time home buyer. Can we qualify for the first time home buyer credit if he did not use the prior home as his primary residence for the three years preceding this purchase, or does the mere fact that he was married and she was using the house as a primary residence impute primary residence status on him?
Hi @Nicolle, unfortunately, the fact that your husband was on the deed to the property during the past three years, while his separated wife lived in it, means that he is not a first time home buyer, even if he didn’t live in the home. The IRS addresses issues like this in this advisory.
I had my home built in june of 2003 and i live in it now am i eligible for this credit.
Hi @Pam, sorry, no, your purchase must be within the time frame set by Congress. The tax credit was enacted in 2008, well after your purchase.
If I qualify for the tax credit but I would like to vest the house that I am purchasing in my trust, am I still able to get the tax credit?
Hi @Amber, we’re constantly amazed by the variety of the questions that we get. This is the first time we’ve heard this. If what you’re saying is that you’re not going to be buying the house in your name, you might not qualify. Remember that you have to live in the home, and the person living in the home has to be on the title in order to claim the credit. That said, you should check this with a trust attorney, who will have a better sense of how your purchase is structured.
I have lived in the home that I am selling for 20 years, and will close on the sale of the home by May 25, 2010. The person buying the home is not a first-time buyer. Am I eligible for the home seller credit?
Hi @Ernie, no, you can only get the tax credit on a purchase, not on a sale.
I have lived in my home for 20 years, and am under contract to sell(as of 3/31/10). The person that I am selling to is not a first time buyer. Can I still get the $6500 tax credit? Also, I am under contract to build my new home. Is there a time limit to get into my new home?
Hi @Ernie, thanks for posting. You can only get the tax credit on your purchase, not on your sale, even if the person purchasing your home does not qualify. As for the home you are building, you would need to be closed by June 30, 2010 if you’re buying from a developer, or moved in by June 30 if you are building the home yourself.
I purchased a home in Missouri last October and currently reside in Maine because the house needs repairs before I can move in. Therefore I am not currently residing there. Do I still qualify for the tax credit.? I meet all the other qualifications.
Hi @Vanessa, thanks for posting. The tax credit is only available for your main home, which is your primary residence. It’s unclear whether a home that you move into within a short period of time after closing would qualify. You should check with your accountant on this, sorry if we can’t answer it.
I qualify for step-up homebuyer tax credit. My wife qualifies for 1st time hombuyer tax credit. If we file our taxes separately, can I qualify for $3250 credit? thank you
Hi @Cameron, unfortunately, you fall right into the “marriage penalty” in the home buyer tax credit. We call this the second type of marriage penalty, where you qualify for one credit and your spouse qualifies for the other. Unfortunately, the IRS has interpreted the legislation to require that both married spouses qualify for the same type of credit. Check out our commentary on the marriage penalty for more information on this, and to find out about the legislation that has been introduced to fix the penalty.
I am wondering what if you owned a home for 17yrs or more? Can you get the home buyer tax credit than??
Hi @Denee, thanks for posting. The answer is that you can absolutely get the tax credit, if you qualify on income and other guidelines. To qualify as a long-time homeowner, you need to have owned a home for five consecutive years out of the last eight. If you’ve owned for 17 years, then you have owned for more than the requisite five year period.
do I qualify for the tax credit if its acontract for deed in which I am buying the house
Hi @Yole, thanks for posting, but I’m not sure if I follow. The tax credit is available for purchases, but all purchases involve a transfer of a deed.
My wife and I just moved to the US from Canada. I am a US citizen. In Canada, we owned our home just shy of 5 yrs. In Aug. of 2009, we closed on our new home in the US. Do we qualify as first time home buyers in the US even if we previously owned a home in Canada?
Hi @Mike, thanks for posting. Great question, something I have not seen before. In fact, the IRS does not care if you owned a home outside the US. So you qualify as first-time home buyers (at least on ownership history, you still have to qualify on other criteria). Here’s the relevant statement from the IRS on this issue:
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I am a first time home buyer and closed on my property Dec 11th, 2009. I meet all of the qualifications for the credit. Can I amend my 2008 return since I have income requirement concerns for 2009? Are there any stipulations? I have seen conflicting information that you must have closed before Dec 1st in order to amend 2008 and receive the credit.
Hi @Sarah, thanks for posting. I’ve just re-read the advisory that the IRS put out about this, and I don’t see any reason why you cannot amend your 2008 return to claim the tax return for that tax year. Purchases in 2009 can be claimed for 2008 or 2009 taxes. Purchases in 2010 can be claimed on 2009 or 2010 taxes. That’s the way it is. When you say you’ve seen conflicting information, I think what’s happened is that you’re looking at bad, out of date resource information about the tax credit, rather than simply relying on the wonderful resources at homebuyertaxcredit.com and on this blog (shame on you!). So what you’re seeing with that December 1st date are references to the old deadline of November 30th 2009 to close in order to claim the tax credit, before the November 2009 expansion. That is, under the tax credit as it stood until November 6, 2009, the deadline was November 30, 2009, and if you wanted to claim a 2009 purchase on your 2008 taxes you had to close before December 1, 2009 — not because of anything to do with taking it off the 2008 taxes but simply because that was the deadline for the program. But once the program was extended through June 30, 2010, people who closed in 2009 (like you) can still claim the credit on their 2008 taxes. Hope that helps.
My husband and I have lived in the same home for five years. He is the sole owner of the home. Marraige according to the IRS imputes ownership to me. My question is: does the ownership imputed to me run from the date of purchase or the date of marriage? We lived together in the home for the first year while engaged.
Hi @K, we got a lot of questions just like this after our recent post. We’ve addressed it here. Short answer is we don’t know yet.
@ Joseph Rand……I am still confused on this tax credit for the first time home buyer. I read somewhere that if you have also currently owned a home for at least 5 years you also qualify, but in this case does it mean that you also have to buy a new home in addition to the home you currently owned for 5 years or will that current home qualify for the tax credit? I am assuming that you will have to go out and purchase a new home………..? thanks
Hi @Johnny, thanks for posting. The tax credit is ONLY available for purchases — it’s a home BUYER tax credit. The issue of the five years has to do with eligibility. It used to be that claimaints had to be a first-time home buyer. In November, the program was expanded to buyers who were also long-time homeowners (five consecutive years of ownership out of the last eight). But you have to be a buyer.
My husband bought a house in 2003 before we were married. I had never purchased a home. I lived there for 5 years, 4 of which we were married before we bought a new house together in mid-Nov 2009. Does your recent clarification, mean that we specifically had to have been married for 5 years as well to qualify?
Hi @Katie, it’s amazing how one clarification leads to more confusion. I have a bunch of questions today from people who are wondering whether they can impute ownership from one spouse to another for the time where the couple lived in the home together but were not yet married. I don’t know the answer to that. On the one hand, the IRS has been so literal with interpreting the tax credit law that I wonder whether they’ll only impute ownership to the non-titled spouse for the length of the actual marriage. On the other hand, the IRS doesn’t seem to care how long you’ve been married, just whether you’re married now — ie. the questions they ask tend to be limited in scope. I’ll try to get clarification this week on this.
My father and I just purchased a home together (closed April 14,2010). I am on the title but I am not on the loan. This will be my primary home and second home for my father. He currently owns a home in FL and does not qualify for the home credit, however, I do qualify. I understand the you have to submit the HUD Settlement Statement when applying for the credit but my name is not on that form. Do you know if there are other documents I can submit in order to receive the credit? Thank you for your help. Lisa
Hi @Lisa, thanks for posting. As you indicate, you DO qualify for the credit, it doesn’t matter if you are not on the loan, or that a non-qualifying partner is purchasing the home with you. As for documents you need, we go through all that on the IRS Page and in this post. Obviously, you’ll need a copy of the deed, a copy of the closing docs like the HUD (even though you’re not on it, it proves the date of closing), and proof that you live in the home (like bills, driver’s license, etc.)
Can you clarify about the “in a contract by April 30th portion?” My husband and I have submitted a contract on a house on 4/14/10, but it is a short sale. We are worried that we will not have an ‘accepted’ contract by 4/30. What date from the contract is used – the submitted date, or the accepted date?
Hi @Alysia, that’s a great question. The IRS has not clarified what being in contract is, and in most short sales involve bank approval. In most cases, though, the seller also has to sign the contract of sale, which is then submitted to the bank. If that’s the case, I would think that your contract with the seller would qualify you. To answer your direct question, the IRS has not said what constitutes a contract, and in my opinion even a simple offer-and-acceptance letter would suffice so long as you close (which is a much more formal process) by the June 30th deadline.
Hi Joseph,
First time poster on your blog and have to say thanks for the all work and time your have put into all of this. Here is my scenario:
Wife and I moved into our current home 5 1/2 years ago (fall of 04)and has been our only principle residence in that time period. When we bought the house in 04 it was in my name only. We married in January of 2008 and refinanced adding my wife’s name to the title in December 2008. We have a sales contract currently in place and are closing in June. I would like to think we meet all the criteria as we have both lived in this house for five years, but would like your opinion. I appreciate your time.
Hi @Matt, thanks for posting, and for the kind words. Your situation is a little tricky, and the IRS has not given clear guidelines on this, but it looks like you meet the fundamental requirements to claim the credit: (1) you lived in your current home for more than five consecutive years (both of you), (2) you’re in contract, and (3) you’ll be closed by June. (I’m assuming you meet the other non-ownership requirements). Since we’ve now confirmed that the IRS will impute ownership of a main home to a non-titled spouse, that would make your wife qualify along with you for the five years of ownership. The only issue is whether the IRS would not impute ownership to her, since you were not married during that time, but as I’ve discussed here the IRS doesn’t seem to care about length of marriage but only whether you’re married at the time of your purchase.
Hello Joseph,
My question relates to the “you cannot have lived in a home you owned in the three years prior to closing.” I purchased in 2007 and lived in my house for 2 years, then rented it for last year. Since I did not live in it for the full 3 years, do I still qualify? Thanks so much!
Hi @Karen, sorry, you’re misreading that statement. You cannot have lived in a home you owned at any time in the past three years. You owned a home you lived in for two of those three years, so you are ineligible as a first-time home buyer. And you’re not a long-time homeowner, because you did not live there for five consecutive years out of the last eight.