Who qualifies for first-time home-buyer credit?
The traditional ending of summer has occurred. The long Labor Day weekend has come and gone. The kids are back in school. High school, college and pro football games are here to stay for the next few months—that’s a good thing when it comes to Rockford football, a good thing when it comes to our in-state college football programs, but a questionable thing when it comes to Lions football.
The baseball season, at long last, is in its last month and the Tigers are holding their own. The first day of baseball back in April seems like such a long time ago now. I do look forward to the playoffs. Perhaps Detroit will have a good-run playoff this year. They have just a good enough team with a few good pitchers and a few good hitters that I really wouldn’t want to play them in the first round of the playoffs. As the old sayings go, “Lightning can strike anywhere,” and “Even a blind squirrel finds an acorn once in a while.” They especially apply to a short playoff series. It’s not inconceivable that the Tigers could end up in the World Series.
Many of my buddies are out practicing their bow-and-arrow skills in anticipation of deer-hunting season. It’s going to open soon and then, not long afterward, those of us who won’t or can’t shoot a bow get a chance to bag a whitetail buck with a little more firepower at our disposal than an arrow. In my case, that firepower is called a Remington 30.06 rifle, a Wing-master 12-guage shotgun equipped with a slug barrel, or a Thompson 50 caliber black powder gun. All of them have scopes, of course. Even though I did have Lasik surgery a few years ago, I still need all the help I can get to make the best shot.
Night temperatures are falling into the 40-degree spectrum. Trees here and there are turning colors. Fall comes too quick for many people, and it did seem to come about halfway through August this year. That’s a little fast for even me.
Something else that is coming up fast is the tax season. I know it’s only September, but in four short months, we will be at the doorstep of the 2010 filing season.
There have been a fair number of law changes that have either occurred this summer or were put into affect last year and are just taking affect now. I’m thinking especially of the first-time home-buyer credit. That particular credit has generated a tremendous amount of telephone calls and amended tax return business for our firm. Every day we are answering questions of who qualifies or who doesn’t qualify. Fortunately, the Internal Revenue Service is providing continuing guidance to us through a question-and-answer format. Hopefully, we can find the right answer to fit our question.
Among many, a very common question is the situation of a child buying a house, but the parents have to co-sign the mortgage. The child has a job, but no credit. In this situation, the child still qualifies for the credit. The owners of the home are allowed to allocate all of the credit to the child. The child will get the credit as long as the parents do not buy the home and then sell it to the child—that’s a no-no.
However, by changing the situation to married taxpayers, the result will be totally different. Two married taxpayers buy a home. One spouse has not owned a home for the required three years, while the other spouse owns the home they currently live in. The marriage is not going well and they decide to separate. If the separated, non-home-owning spouse buys a home, will that purchase qualify for the credit? The answer is no. Marital status on the date of closing of the home controls the credit. If one spouse owns a home during the three-year qualifying period, it disqualifies both spouses. Both are disqualified even if they are separated, even if the divorce is in the works, even if the one spouse’s name has never been on the title to any home, or even if they file separate tax returns. In order to qualify for the credit, wait until the divorce is final and then buy a house.
Finally, the closing of the new home must occur before December 1, 2009. The law is very clear and leaves no wiggle room whatsoever. A contract agreement to purchase the home is not good enough. Putting earnest down on the home is not good enough. The buyers must have a closing document in their hands on November 30 or the purchase will not qualify. I’m thinking that Monday, November 30 will be a very busy day for the title companies. Missing out on $8,000 because you closed on Tuesday, December 1 and not Monday, November 30 would upset just about anyone. This is Jerry Coon signing off.
Jerry Coon is an Enrolled Agent. He owns
Action Tax Service on Northland Drive in Rockford.
His telephone number is (616) 866-4704.
His e-mail address is firstname.lastname@example.org.