8000 First Time Home Buyer Tax Credit Has Restrictions

8000 First Time Home Buyer Tax Credit Has Time Restrictions

Q: I have enjoyed reading your posts and responses on the $8,000 first-time home buyer tax credit. I have done a lot of research and think I have quite a unique situation.

I have rented an apartment for the last 5 years. I started renting after I got divorced. My ex wife and children live in the old home. The home and loan are completely in my name and my divorce paperwork indicates my wife is responsible for the payment. I have not lived there for 5 years.

I would like to buy a home and stop renting. The way I read all the rules I don’t think I qualify as a first time homebuyer since the loan on the old house is in my name (although it has not been my principal residence in 5 years) and I don’t think I qualify as a repeat home buyer since I have not lived in my old home in 5 years.

Do you think I qualify for either tax credit? I meet all the other qualifications about price, income, citizenship, etc.

A: The $8,000 first-time home buyer tax credit rules state that you must be a first-time buyer or not owned a primary residence in the past 3 years.

It seems as though you might qualify for an $8,000 first-time home buyer tax credit under the second part of the rules.

You may own investment real estate and still qualify as a first-time buyer, which is how I’d see your former primary residence. Since you have not lived in the home for five years, even if the property and the mortgage on that property were in your name, your primary residence has been a rental apartment. If you’ve lived in that rental apartment for the last 3 years, you should qualify as a first time home buyer on that issue.

Remember, you still have to qualify for the $8,000 tax credit in other ways. If you have remarried, your spouse must also qualify in the same manner that you qualify. And if you are single and your adjusted gross income is more than $125,000 (or $225,000 if you are married), the home buyer tax credit is reduced or eliminated. The property you purchase cannot cost more than $800,000.

Lastly, you must go under contract to purchase your new home no later than April 30, 2010 and you must close on or settle the purchase of the new home no later than June 30, 2010.

We’ve received many letters from home buyers who have missed earlier dates to obtain the home buyer tax credits by a few days. But the tax credit rules are quite strict and inflexible. If you show up for your closing on June 30 and fail to close that day for any reason, you won’t be eligible to get the tax credit even if your actual closing date is one day later.

You can check your eligibility at homebuyertaxcredit.com, and read more about the $8,000 first-time home buyer and $6,500 tax credit rules at ThinkGlink.com.