First Time Home Buyer Tax Credit 2010

Q: I’ve been thinking about the move up tax credit and I’m not happy with the fact that the move up tax credit program does not promote being married.

My husband bought his first house in April, 2001. In October, 2007, we refinanced the house and put my name on the title. We got married in July, 2008 and a year later, in July, 2009 we sold the home.

My husband owned his home for eight years and I owned it for 22 months. We built a new home, and closed on it on November 17, 2009.

Obama signed the new tax credit law enacting the move up tax credit program on November 6, 2009. Obviously, neither of us qualified for the $8,000 first-time home buyer tax credit.

But we’ve come to find out we also don’t qualify for the $6,500 move up program. Apparently, both spouses had to own a home for five consecutive years within the past eight months.

If we bought our home and weren’t married, my husband could qualify for half of the $6,500 tax credit, so he could have received a refund check for $3,250 on his taxes. I wouldn’t qualify for anything which is fair because I didn’t meet either qualification.

To me this law discriminates against married couples. If we had waited until 2010 to get married, then my husband would have had an extra $3,250 in his pocket. What do you think?

A: You’re not the first to make this observation. There is a whole bunch of folks who are angry about this apparent marriage penalty that has been built into the tax credit rules.

What do I think? I’m not sure why this kink in the tax law exists. It seems silly to penalize a couple because they got married.

On the other hand, you were clearly going to buy this house anyway, and while I’m sure an extra $3,250 would have come in handy, it didn’t make or break the sale for you.

I think a number of people have forgotten that the purpose of the tax credit was to encourage folks to get back into the real estate market. While it feels like free money is slipping away, there are a number of folks who couldn’t make it work without it. I’m glad that isn’t the case for you and your husband.

When lawmakers make these laws, they have to create a cutoff point. They could have provided that at least one spouse had owned a home for at least five years, but each change to a law can have unintended consequences. In this case, Congress decided to require both the husband and the wife to have owned a home for at least five years.

If you’re angry, you should file a complaint with your Senator and Congressional representative, since they’re the ones who voted on it.