Michael on April 10th, 2009
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It’s Friday, so it’s time for this week’s reader-submitted Q & A. If you’d like to submit a question, click here for more information or simply email a question.

I was wondering if we qualify for a first time home buyer credit. We just bought our first house in Nov 2008. My husband purchased a home with his ex-wife more than 3 yrs ago, (his name is still on that one) but has not lived there in 4 yrs.

Thank you for your help,
Donna

I have been living in a trailer for 11 years.  I co-own the trailer with my spouse.  Can we take the first time homeowner credit?

-TMC

Straightforward Answers: Donna: Yes.  TMC: No.

Detailed Explanation:

Both the 2008 version of the first time home buyer tax credit and the credit for 2009 first time home buyers have raised a ton of interesting questions (By far, they are the most widely read and commented on posts in the history of this blog.)  Let’s take these two questions one at a time.

Impact of A Spouse’s Current of Former Home Ownership

One of the key constraints of this credit is that if either spouse is disqualified for any reason, than both spouses are disqualified. (The same is not true of unmarried taxpayers who jointly purchase a home. This is why engaged couples have an enormous tax planning opportunity.  For example, if one fiancé owns a condo but they both plan to move in together into a home in the suburbs after the wedding, it’s best to buy the home before they get married.  Details available throughout the comment section of the 2009 article.)  In Donna’s case, the question is whether her husband’s previous ownership of a home with his ex-wife disqualified him and his current wife.

If he still owns the home with his ex-wife, you’re Donna and her husband are out of luck. However, if he moved out of that home more than three years ago and it became his ex’s home exclusively at that time, you’re in the clear. Take the credit.

The answer to TMC’s question is less a happy one.  In Congress’ desire to be generous, the credit specifically applies if you are to purchase a trailer home as your first home. As such, a reasonable interpretation of the law says that previous (or current) ownership of a trailer similarly disqualifies you.  So if you’re going to buy your first home and it is a trailer, you’re in good shape to take the credit.  If you currently own a trailer and then seek to buy a first home on a permanent foundation, you’re apparently out of luck.

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21 Comments to “Friday Q & A: First Time Home Buyer Tax Credit”

  1. Danielle says:

    If I am going to be buying a trailer but rent the lot will i still qualify for the tax credit. Second question: if my mom is going to be co-signing for me, will that disable me from getting the credit (she hasn’t purchased a home in over 24 years) Third question: Does the home have to be new, or can it be pre-owned?

  2. Michael says:

    @Danielle:

    Yes, you’ll qualify if you buy a trailer and don’t own one now. Your Mom can co-sign and you can still get the credit. (In fact, you can share the credit anyway you wish, provided she’s also under the income limits). The trailer/home can be new or pre-owned.

    Good luck!

  3. Christy says:

    I am looking into buying my first home, my mom will be co-signing for me and owns her own home will this disable me from getting the tax credit and anyother first time home buyer perks?

    Thanks!

  4. Michael says:

    @Christy: If you Mom co-signs for you, that will not disqualify you from receiving the first time home buyer tax credit. She cannot receive any of the credit and you must live in the home for at least three years.

  5. Lori says:

    I own a trailer house on a rental lot now. If I purchase a home would I qualify for the first time home buyer tax credit?

  6. Michael says:

    @Lori and anyone who owns a trailer home, mobile home, or lives in an RV and has been asking or wondering about if they’ll qualify for the first time home buyer tax credit if they purchase a home that is permanently fixed to the land: I just found this link at the IRS web site which seems to suggest that those currently living in RVs will qualify (and presumably, as I have suggested, those living in mobile homes and trailer homes without motors will not.)

    Here is the relevant Q & A excerpted:

    Q. Can an individual who has lived in an RV qualify for the credit?

    A. For purposes of the first-time homebuyer credit, an RV with a built-in motor is personal property that is not affixed to land and does not qualify as a principal residence. Accordingly, someone who has owned and lived in an RV within the past three years may still qualify as a first-time homebuyer.

  7. PATTY says:

    I WAS MARRIED ALMOST 3 YEARS, WE FILE TAX TOGHETER BUT HE WAS THE OWNER FOR THE PROPERTY (HOME)AND I NEVER HAD INTERSET IN THE PROPERTY, I BUY A HOUSE IN 2009, NOW I’M DIVORCE CAN I APPLY FOR THE FIRTS TIME HOMEOWNER CREDIT?

  8. Michael says:

    @Patty: No, you don’t qualify because you are considered to have owned a home in the last three years.

  9. Vic says:

    Does a Motorcoach qualify for the 8K tax credit if it is my first home and my primary residence? Please advise.

  10. Michael says:

    @Vic: The IRS recently added some information to the site which tangently addresses your question:

    Q. Is a taxpayer who purchases a mobile home and places the home on leased land eligible for the first-time homebuyer credit?

    A. Yes. A mobile home may qualify as a principal residence and it is not necessary that the taxpayer own the land to qualify for the first-time homebuyer credit.

    Q. Can a taxpayer who purchases a travel trailer qualify for the credit?

    A. A travel trailer that is affixed to land may qualify as a principal residence.

    Q. Can an individual who has lived in an RV qualify for the credit?

    A. For purposes of the first-time homebuyer credit, an RV with a built-in motor is personal property that is not affixed to land and does not qualify as a principal residence. Accordingly, someone who has owned and lived in an RV within the past three years may still qualify as a first-time homebuyer.

    I take the combination of these questions to say no, you won’t qualify, since it’s extremely unlikely your home is affixed to the land.

  11. Michael says:

    @All: See my above comment – looks like the IRS is now explicitly permitting current RV owners to qualify for the credit.

  12. Matt says:

    I am buying land that I want to permanetly affix a travel trailer. I do not have the travel trailer yet but will have a contract signed for the land on April 30 2010. If I buy a travel trailer outright after the 30th will I still qualify for the tax credit,or do I have to own it before the 30th still?

  13. Michael says:

    @Matt: Unfortunately, you must purchase a home by April 30, not merely buy land with the intent to subsequently add a home.That’s how I understand it, anyway.

  14. felicia says:

    I paid cash for my trailer in 2008,can I still get the first time homebuyers credit? Which tax return should I amend to get th credit?

  15. Michael says:

    @felicia: Yes, if you otherwise qualify. Amend your 2008 return or your 2009 return whichever gives you the best outcome. (It probably won’t matter.)

  16. chase says:

    I bought a mobile home in 2008 and paid cash for it. It was not my principal residence and I never got any deductions for it. I later bought a house in 2010. Does the house qualify?

  17. Michael says:

    @chase: If the mobile home you purchased was never your principal residence and you purchased a home before April 30, 2010 and otherwise meet the rules, you’ll qualify.

  18. Pat says:

    Hi, I technically own a house with my former spouse. We divorced due to domestic violence. My spouse has since lived in the house we purchased since the divorce and I have not stepped foot in the house for 5 years. At the time of the divorce I was a homemaker and I could not afford an attorney to settle any of the community property issues. I am now struggling as a single parent, but I would like to pursue a home ownership program designed for individuals with low income.

    Is there anyway for me to qualify as a first-time home buyer?

  19. Michael says:

    @Pat: This post pertained to the first time home buyer tax credit. No home purchases have qualified since last year. Sorry.

  20. Rebecca says:

    I am purchasing a new trailor and will be setting it on my familys property, will i qualify for a first time home owners credit? I have never owned a home, and if the answer is yes , how much can i expect to recieve

  21. Michael says:

    @Rebecca No, the credit expired a long time ago . . . Sorry.

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