Your Tax Questions Answered
Keeping the Home-Buyer Credit
In the Family
Kiplinger editorial director Kevin McCormally and fellow tax experts Peter Blank and Mary Beth Franklin tackle your most pressing tax challenges.
By Kevin McCormally, Editorial Director, Kiplinger.com
February 9, 2010
QUESTION:
I was reading your article in regards to the adjusted bill concerning the home buyer's tax credit. I noticed that those buyers who deal with related parties are not eligible to claim this credit. If I am dealing with an uncle, and I am in fact purchasing the home from him, meaning it is not a gift or inheritance, am I eligible to file the tax credit?
KEVIN ANSWERS:
You’re in luck. An uncle doesn’t count as a related person for purposes of prohibiting the first time buyer credit. For this purpose, a related person is a spouse, ancestor (parent, grandparent, etc.) or lineal descendants (children, grandchildren, etc.). Buying from your uncle doesn’t put the kibosh on the credit.
QUESTION:
Does the definition of decendants or ancestors include a sibling? The tax information doesn't say. It lists grandparents, parents, ancestors or descendants.
KEVIN ANSWERS:
You’re talking about the definition of related person for purposes of the home buyer credit? If so, no, a brother or sister doesn’t count as a related person for this purpose. Thus, you can qualify for the credit even if the seller is a brother or sister.
QUESTION:
My brother purchased a home in November of 2009. His prior residence he and his wife owned for 15+ years and paid off last Februay. He is currently trying to sell prior residence independently, not through a realtor. Is he able to take the housing credit under the long term credit provisions?
KEVIN ANSWERS:
Whether or not he sells his prior home does not matter when it comes to qualifying for the $6,500 credit. The key is that he moves into the new home as his principal residence. He never has to sell the prior home; he can keep it as a vacation home, for example, or rental property. If he owned and lived in the same principal residence for five of the eight years leading up to the purchase of the new home – and the purchase date was on or after November 7, 2009, he can qualify.
QUESTION:
I was reading your article about the home buyer tax credit. My situation is a little different from any that you mentioned. I recently have gone through a divorce. In my settlement I gave our family home to my ex. wife. We lived there for almost 8 years together. since then I have bought another house for myself. My question is since I didn't technically sell my house, can I still qualify for the tax credit of my new property ?
KEVIN ANSWERS:
Yes, you can still qualify. There is no requirement that you sell your previous home, just that you buy a new one within the time perimeters of the home buyer credit. Whether you qualify forthe $6,500 long-time resident credit depends on when you bought the new home. That credit is only available for purchase after November 6, 2009. Prior purchases don’t qualify. If you bought after that date, you can qualify for the credit if you owned and lived in the same principal residence for five continuous years out of the eight years leading up to the purchase. From your e-mail, it sounds like you pass that test. For what documents you need to send in with your return, see the instructions for form 5405.
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Reader Comments (4)
Posted by: Jason at 02/16/2010 01:31:15 PM
My wife and I are first time home buyers and we bought our home July 2 2009 from my mother. We bought the home thinking we would get the 8000.00 credit. We are filling our taxes and every thing says we cant get the credit...What can we do.
Posted by: maria at 03/15/2010 11:13:02 AM
I bought my first home in November and the closing date was November 6, 2009. My adjusted gross income is just too high for the closing on the 6th, but meets the limits for closing on November 7. Is there anything that can be done to even qualify for part of the home buyer's credit. What bad luck to miss this credit by one day.
Posted by: Frank at 03/17/2010 08:34:37 PM
My Mother passed away last September at age 101. She had large medical bills. She had an account with (an)...online bank. I was on the account as joint owner. During October I sent (the bank) a copy of the death certificate and they transfered the account to my name and social security number. During February (the bank) sent a 1099-INT form charging the years interest to my SS#. Since 2/6/10 I have called...8 times requesting they issue a corrected 1099 crediting interest to my Mother's social security number through September and my SS# for the remainder of the year. They refuse to do this. What can I do to get this corrected?
Posted by: tony at 04/10/2010 09:37:01 AM
I bought a house in June of 2009 but I had also inherited a house in 1992 that I am now renting. Do I qualify for the first time home buyer tax credit since this is the first home I have ever purchased?