Homebuyer Credit Expanded and Extended (Part 5)
Homebuyer Credit Expanded and Extended (Part 5)
The credit is fully refundable and, if you qualify as a first-time homebuyer, having tax-exempt income will not preclude eligibility. Although there are maximum income limits for qualifying first-time homebuyers, there are no minimum income criteria. Thus, someone with no taxable income who qualifies as a first-time homebuyer may file for the sole purpose of claiming the credit for a refund.
The first-time homebuyer credit does not apply to homes located in the U.S. Territories. A taxpayer who owned a principal residence outside of the
If you qualify for the credit you are not required to claim the first-time homebuyer credit.
You can not take the credit if the following describes you: Your income exceeds the phase-out range. You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild. You do not use the home as your principal residence. You are a nonresident alien.
Inheriting a home and living in it automatically disqualify you as a first-time homebuyer. An ownership interest in a prior principal residence would bar you from being considered a first-time homebuyer. As long as you owned and used the prior home as your principal residence, you are not a first-time homebuyer. There is no exception for taxpayers who did not buy their prior residences.
If, within 36 months of the date of purchase, the property is no longer used as your principal residence, you are required to repay the credit. Repayment of the full amount of the credit is due at the time the income tax return for the year the home ceased to be your principal residence is due. The full amount of the credit is reflected as additional tax on that year's tax return.
If a person does not actually make the payments on a home that’s their principal residence, but the deed and mortgage documents are in their name, they are considered to be a first-time homebuyer. The taxpayer is eligible for the first-time homebuyer credit regardless of who makes the mortgage payment.
If you have a specific question regarding this article, as a public service, and at no cost to you, I invite you to call me with your question. Also at no charge, I am happy provide you with a second opinion on your return that was done by another paid preparer.
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Thank you for your interest in reading my tax column. This column is offered as a public service with the understanding that each person's tax situation is different; that you should consult your CPA before taking any action based upon comments made in this article.