Discussion:First time homebuyer credit-Divorce issue
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Revision as of 01:33, 10 September 2009 Tiredoftaxes (Talk | contribs) (The ex-husband,) Next diff → |
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| Check with the client. Perhaps, they had a prenuptial agreement, or perhaps the home was acquired with gifted or inherited funds. | Check with the client. Perhaps, they had a prenuptial agreement, or perhaps the home was acquired with gifted or inherited funds. | ||
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| + | {{ForumReplyPost|UserID=Tiredoftaxes|Date=10 September 2009|Text=The ex-husband, an attorney, had her sign a document that said she realized she was not on the title of the house. The bank had her sign it after they already had closed on the house. She does not have any record of it. So, I do not have anymore information than that. But I do not see any example by IRS with regards to this specific issue. | ||
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| + | Would that be a question to ask her lawyer? Did she have an equitable interest in the house? I have no idea. | ||
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| + | Is there a specific form we need to have the client sign to protect us with regard to the credit? Such as the Earned income credit information.}} | ||
Revision as of 01:33, 10 September 2009
Discussion Forum Index --> Basic Tax Questions --> First time homebuyer credit-Divorce issue
Discussion Forum Index --> Tax Questions --> First time homebuyer credit-Divorce issue
Tiredoftaxes (talk|edits) said: | 9 September 2009 |
| I have a client who finalized her divorce in 12/08. She was married since 2004. They bought a house after they were married in 2004, but the husband only had his name on the legal papers and mortgage. The client bought a home in 1/09 solely in her name. So as of the date of purchase(1/09), she was single. She is stating that her lawyer told her that she qualified for the credit. After researching the topic, I am not sure. Does being previously married and the husband owning the house solely imply that she had ownership interest in the house? She did not receive the house in the settlement, nor any of the tax deductions relating to it. She didn't technically own a personal residence prior to the divorce, but her husband did. Or does the date of purchase, since it is subsequent to the divorce, mean that she does not have any ownership interest in the old house? I would appreciate any help in this matter. | |
| 9 September 2009 | |
| "36(c)(1) FIRST-TIME HOMEBUYER. --
The term "first-time homebuyer" means any individual if such individual (and if married, such individual's spouse) had no present ownership interest in a principal residence during the 3-year period ending on the date of the purchase of the principal residence to which this section applies." But she was married to someone that had ownership within the last three years. | |
Tiredoftaxes (talk|edits) said: | 9 September 2009 |
| So to her point that she is not married when she bought the house, it makes no difference. Since she had a spouse within the last three years that owned a house, she is considered to have owned it also. Why would the attorney have said that? | |
| 9 September 2009 | |
| "Why would the attorney have said that? "
Believe the Code - not the attorney. Perhaps you might enlighten him/her. | |
| 9 September 2009 | |
| The attorney is basing his opinion on IRC Sec. 36. However, I believe that IRS is not really following the statute on this issue. IRS has made an informal announcement that a married person is considered to have an interest in a home if his spouse had an interest in the home. Clearly, this makes sense in a community property state, but otherwise, it only makes sense if the property was "marital property". | |
Tiredoftaxes (talk|edits) said: | 9 September 2009 |
| It is in the state of Arkansas which is not a community property state. So where does that leave me? Go with my gut to not allow it or keep looking? I have looked at IRC Sec. 36, is there anywhere else I can look? | |
| 9 September 2009 | |
| May be attorney is interpreting and if married to mean at the date of purchase subsequent to the divorce. That is to say, if it said and if/was married within the last three years, then attorney would not take his present position. | |
Tiredoftaxes (talk|edits) said: | 9 September 2009 |
| Is there any separate guidance? Is the attorneys stance legitimate? I really do appreciate your help. | |
| 10 September 2009 | |
| The IRS "Scenarios" page states that: "Eligibility for the first-time homebuyer credit is determined on the date of purchase." This is in the context of a single buyer later marrying a home owner. There's some merit to the argument that "and if married" applies to the date of purchase only and not the three year period. Let's propose the opposite scenario: non-homeowner marries an ex-homeowner. Does that now disqualify the non-homeowner? Would it not be logical that if marriage imputes the spouse's previous ownership then divorce expunges it? But who says the tax code is logical? | |
| 10 September 2009 | |
| I believe that Arkansas is a marital property state. Consequently, I believe that each spouse would have an equitable interest in any property acquired during the marriage (other than gifts or inheritances).
Check with the client. Perhaps, they had a prenuptial agreement, or perhaps the home was acquired with gifted or inherited funds. | |
Tiredoftaxes (talk|edits) said: | 10 September 2009 |
| The ex-husband, an attorney, had her sign a document that said she realized she was not on the title of the house. The bank had her sign it after they already had closed on the house. She does not have any record of it. So, I do not have anymore information than that. But I do not see any example by IRS with regards to this specific issue.
Would that be a question to ask her lawyer? Did she have an equitable interest in the house? I have no idea. Is there a specific form we need to have the client sign to protect us with regard to the credit? Such as the Earned income credit information. | |
