Discussion Archives:First Time Home Buyer Credit-Remodeling

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Discussion Forum Index --> Advanced Tax Questions --> First Time Home Buyer Credit-Remodeling


Discussion Forum Index --> Tax Questions --> First Time Home Buyer Credit-Remodeling

JStu5 (talk|edits) said:

4 March 2010
I have a taxpayer that I think qualifies for the first time home buyer credit, meets all the criteria and the home was purchased after November 6, 2009. The question is does the taxpayer have to occupy the home before 12/31/09 to take the credit for 2009. He has started remodeling the home and his intent is for it to be his main home, but not yet occupied, still living in his apartment while he is doing the work (the new home is in a different state). Any thoughts or comments would be appreciated, I could not find anything addressing this issue.

Thank you.

Trillium (talk|edits) said:

4 March 2010
Your question sounds very much like Illini's question here: FTHB residency requirement (the applicable section for you starts about 1/2 way down).

CATaxAtty (talk|edits) said:

4 March 2010
You may be confusing the rule that applies when a taxpayer builds the home. In those cases, the date of sale is considered to be the date the taxpayer moves in. For all other homes, the date of sale is the date of sale. I don't believe that there is an immediate residency requirement, only that the taxpayer have a bona fide intention to occupy the house as a principal residence. But there doesn't seem to be any definitive guidance on this.

I would take it in 2009 and not look back. Congress and the IRS have been extremely generous with the credit, even allowing people who don't buy the home until 2010 to take the money on their 2009 return. http://www.federalhousingtaxcredit.com/faq1.php#21

CATaxAtty (talk|edits) said:

4 March 2010
I would also add this example, posted by Dnc0716 on another thread...

S8. A qualifying taxpayer bought a home in August 2008 that needed a lot of work before occupying. They finished the renovations and moved in the home in January 2009. Can they claim the $8,000, since they did not occupy the home until 2009? A. No. Taxpayers who purchase an existing home and renovate the property before moving in are eligible for the first-time homebuyer credit based on the date of purchase, not the date of occupancy.

This would seem to settle the matter. The date of sale is what counts. Not the date of move-in. And even if there were some debate... the ability to retroactively apply the sale to previous tax years would render this a moot issue anyway. The taxpayer either qualifies in 2009, based on the year of sale. Or the taxpayer qualifies in 2010, and can take the credit on the 2009 return anyway.

Trillium (talk|edits) said:

4 March 2010
Oh brother.

Discussion:First Time Homebuyer Credit - Principal Residence Requirement is the discussion CAT is quoting; please do read that as I'm not going to try to explain yet again why that example is explaining that a $7,500 repayable credit cannot be converted into an $8k nonrepayable credit by delaying when you move in, and has nothing to do with determining whether or not you actually have a principal residence.

If your client hasn't yet moved in to the new home or even into the state that it's in, it's nothing but a potential future home, a second home even, but not a principal residence. If it's not a principal residence, it's not possible to claim the credit for it. See Sec. 36(a) for that; and Sec. 36(c)(2) for the definition of principal residence. If it becomes his principal residence, decide then whether or not that happened in a timely enough fashion for you to amend 2008 or 2009 to claim the credit for his 2009 purchase.

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