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. The questions about the first time home buyer tax credit keep coming so this week we’re including two on the topic. If you have your own, feel free to comment at the 2009 First Time Home Buyer Tax Credit.
I am a first time buyer BUT I was married in 2005 and lived with my husband for 3 months; after 3 months I moved back with my mother and have lived there every since which has been almost 4 years now. My estranged husband owned his house prior to the marriage and I am not on the loan or the deed and he has an FHA loan. I have been approved for a FHA loan can I take the $8,000 tax credit if he signs away his rights. We have no intentions on getting back together.
I have clients who live in another state and would like to purchase a home (in Colorado) for their son while he attends college here. If they purchase the home in son’s name, would he be able to take advantage of the First Time Homebuyers Credit? The home could either be a conventional loan or cash purchase. Your thoughts on the best way to go?
–Carly K., Colorado
Short Answers: A problem and no problem.
More Detailed Explanations: Anonymous hasn’t owned a home in four years. Since the definition of a first time home buyer is anyone who hasn’t owned a home in the last three years, she’s okay on that front. However, she can’t be married to someone who doesn’t qualify. She appears to still be married to her husbdand and, since her husband is a homeowner, she is disqualified. If she were divorced, the answer could be different.
Carly’s clients are considering purchasing a home for their son who has never been a homeowner before and who, we can safely assume, is well underneath the income limits described here. The source of financing is irrelevant (cash vs. mortgage) so long as it is the son who will own the home. Keep in mind that there may be gift tax implications if the parents are just giving him a huge amount of cash to assist with the down payment. (If less than $26,000, there’s no problem).