A little disagreement between preparers on the first time home buyer credit. One of us says that if either married party has owned a home, the credit cannot be taken. Another says that if they file separately (MFS), the one who never owned a home can take the credit. Opinion?
The 1040 Quickfinder Handbook (2008) clearly covers this on page 12-2. Under the heading "Who is a First-Time Homebuyer?" it states
>>A first-time homebuyer is an individual who had no present ownership interest in a principal residence during the three period ending on the date of the purchase of the residence to which the credit applies. If the individual is married, neither the individual nor his spouse may have had a present ownership interest in a principal residence during that three-year period.<<
I agree with the preparer that says no credit as it has nothing to do with filing status.
Thanks, OldJack. I am the preparer who said "no credit." The odd thing is that my friend owns 21 tax offices, has a weekly radio show giving tax advice, and she and her office managers are taking that credit on MFS returns, for practically every married couple where one of them previously owned a home and one did not.
Well Jerry, As I understand it, the IRS has said that people are taking the credit even without buying a new residence. It may be one of the biggest frauds to date. I expect your friend will eventually have a lot of unhappy clients.
>>my friend owns 21 tax offices, has a weekly radio show giving tax advice<<
Face it--your friend runs a refund mill. Some afternoon when you are feeling silly ask her about EIC or hobby losses or listed property. But never talk to her about taxation when you are straight, because professionally she'll just make you feel dirty.
I wouldn't go that far, jainen. She normally is very honest and conscientious. She built her practice from one office 8 years ago to the 21 she owns today. However, in this case, she is getting her information from our local realtors' association, rather than from tax people. I don't know why, but I can't seem to convince her otherwise.
neither honest nor conscientious. -
11/9/09
at 11:46 AM
>>She normally is very honest and conscientious<<
It's nice of you to stick up for your friend, but I'm not falling for that line. She blames this on someone whose business is pushing incentives to buy a house? How about some genuine tax research, if she is so conscientious? She can't point to a single professional tax guide or update class that supports her position.
>>I can't seem to convince her otherwise<<
Let me quote the Housing Assistance Tax Act of 2008, that is, the plain language of the law.
"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."
There is NOTHING in there about filing status, so she is making it all up as she goes along. That is neither honest nor conscientious.
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