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,
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?
Straightforward Answers: Donna: Yes. TMC: No.
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.