Profile picture for mouse58756

first time home buyer question/scenario

I am having a hard time understanding the tax credit for first time buyers and wondering if anyone out there has a grasp on this.  Here are the facts:

I purchased a home in 2001 and used it as my primary residence until I moved out in January of 2007.  Since that time I have rented the place out while I was moving around.  Now I am buying a new house and hopefully closing before June 30th, which I understand to be the drop-dead date to qualify for the $8,000 tax credit.  My question is this:  do I qualify for the $8,000 credit as a first time home buyer as I have owned, but not used, my first home as a primary residence in over 3 years?  And if I don't qualify for the $8,000, do I qualify for the $6,500 tax credit for "move-up" buyers as I have had a house and did use it as a primary residence for 5 consecutive out of the past 8 years?

My understanding is that I qualify for the $8,000 credit as, while I have continued to own my own home, I have not used it as my primary residence since January of 2007.  And if not the $8,000, would I qualify for the $6,500 as I did use the house as my primary residence for 5 our of the last 8.

Thanks in advance for any thoughts.
  • February 27 2010 - Royal Oak
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Answers (11)

Per the previous conversations, you would qualify for the first time homebuyer credit based on the facts given.  However, there are income restrictions.  I would visit the IRS website to make sure you qualify. 
  • March 02 2010
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Profile picture for CORONA NICK
I hope your not just trying to buy to get the tax credit...lol
  • March 02 2010
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I stand corrected.  Here's what I was able to find on the IRS website.  Hope this helps.

S3. A taxpayer owned her principal residence. Several years ago, she decided to relocate to a rented apartment, but did not sell the former residence. Instead, she rented it out to tenants. Now the taxpayer plans to buy another house and make it her new principal residence. Does she qualify for the first-time homebuyer credit?

A. A taxpayer who owned rental property within the past three years is still eligible for the credit. The taxpayer cannot have owned and used a home as his or her principal residence within the last three years.

http://www.irs.gov/newsroom/article/0,,id=206294,00.html

  • March 02 2010
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I agree with Lisa,
You are not 1 time home buyer, you qualify for the up grade $6.500
Isabel
  • March 01 2010
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Profile picture for Lisa Kulback

We have a 3 day attorney review period in NJ.  If You have the same law then you must complete attorney review before April 30 not just have signed contracts.

  • March 01 2010
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Profile picture for FredFarg
I'm not an agent, but I also believe Michael is correct.
I also agree with what wetdawgs said, except I believe he got one word wrong - you need to have your CONTRACT signed by April 30. 
The IRS web-page uses "buy" and "purchase" repeatedly, but this line makes it clear -
"You must enter into a binding contract to buy the home before May 1, 2010 and close before July 1, 2010, in order to obtain the credit."
  • March 01 2010
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Profile picture for wetdawgs
 Michael's answer is correct.    Lisa is missing the fact that the home must be a principal residence within the last three years, and you have made it clear that it has not been.   Owning rental property does not count against you on qualifying for the first time home buyer's credit.   You must have the documentation to prove that you have been renting it out and documentation to show your principal residence is elsewhere. Hopefully have been filing out your tax forms to reflect the rental status, income etc.

Make sure you have your offer in by April 30 and house closed by the end of June. 
  • February 28 2010
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Profile picture for elchen01
  • February 28 2010
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I disagree with the answer above.  Since it appears in your question that you not only have owned your previous home since 2001, it seems like you still own it.  That would disqualify you as a first time homebuyer, even though you have not lived in it in 3 years.  The first-time homebuyer's credit is for people who have not "owned" a home for three years.  However, it appears that since you did live there from 2001 until 2007, even if you haven't sold it, your purchase of another home does qualify you for the move-up credit.  Again, like mentioned above, there are other qualifications, that you would have to meet (i.e., income, contract date, close date, etc.). 

Hope this helps.
  • February 28 2010
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Profile picture for mouse58756

Thanks Michael for your input/thoughts.  Your assumptions are correct, I have been renting at various locations since leaving my primiary residence in January of 2007.  As to the remaining qualifications, I believe I meet those too.

Again, I appreciate your thoughts.

  • February 27 2010
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"...I moved out in January of 2007.  Since that time I have rented the place out while I was moving around."

I am going to assume in that three plus year span that you have not owned another home that has been your primary residence. I am assuming you have rented in this three year span.

With that assumption, you would qualify for the First Time Homebuyers Credit of $8,000 based solely on this fact alone. There are additional qualifiers for the program which you need to pass, but since this home has not been your primary residence for three plus years and you have not owned another home in this period (that was your primary residence) you would qualify for the credit.

Follow the link for more information.

http://www.irs.gov/newsroom/article/0,,id=206291,00.html
  • February 27 2010
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