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Carole &…, Real Estate Pro in Suttons Bay, MI

Does anybody know if you actually have to sell your primary residence when you buy up to get the tax incentive?

Asked by Carole & Greg Higgins, Suttons Bay, MI Thu Jul 29, 2010

I am wondering if a buyer who went under contract prior to the April 30th deadline and closes prior to the September 30th deadline would have had to sell their current primary residence in order to qualify for the move-up credit or can they retain their current primary and use it as a rental, buy up and still get the $6500 tax credit

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http://www.irs.gov. Search for 'Home Buyers Tax Credit' You'll find this list of people who don't qualify.

"You cannot claim the credit if any of the following apply.

The purchase price of the home (defined in the instructions for line 1 on page 3) is more than $800,000. This rule applies to homes purchased after November 6, 2009.

Your modified adjusted gross income is:

$95,000 or more ($170,000 or more if married filing jointly) and you purchased your home before November 7, 2009, or

$145,000 or more ($245,000 or more if married filing jointly) and you purchased your home after November 6, 2009.

See the instructions for line 5 on page 3.

You cannot claim the credit for any year for which you can be claimed as a dependent on another person's tax return. This rule applies to homes purchased after November 6, 2009.

You (and your spouse if married) are under age 18 on the date of purchase. This rule applies to homes purchased after November 6, 2009.

You are a nonresident alien.

Your home is located outside the United States.

You sell the home, or it ceases to be your main home, before the end of the year in which you purchased it. This rule does not apply if you are a member of the uniformed services or Foreign Service, or an employee of the intelligence community on qualified official extended duty as defined in the instructions for line 12 on page 4 and you sell the home, or it ceases to be your main home, after 2008. You can claim the credit on the return for the year of purchase or choose to claim it on your return for the year before the year in which you purchased the home if you otherwise qualify for the credit.

You acquired the home by gift or inheritance.

You acquired your home from a related person. This includes:

Your spouse, ancestors (parents, grandparents, etc.), or lineal descendants (children, grandchildren, etc.).

A corporation in which you directly or indirectly own more than 50% in value of the outstanding stock of the corporation.

A partnership in which you directly or indirectly own more than 50% of the capital interest or profits interest.

For more information about related persons, see the discussion under Nondeductible Loss in Chapter 2 of Pub. 544, Sales and Other Dispositions of Assets. When determining whether you acquired your main home from a related person, family members in that discussion include only the people mentioned in 9a above.

You acquired your home after November 6, 2009, from a person related to your spouse. This includes your spouse's ancestors or lineal descendants (for example your parents-in-law or your stepchildren), and any relationships described in 9b or 9c above that your spouse has.
1 vote Thank Flag Link Thu Jul 29, 2010
depends on how you feel about being audited by the IRS
1 vote Thank Flag Link Fri Jul 30, 2010
My understanding is that, as long as the purchased property becomes their primary residence, they do not have to sell their current home. They can hold onto it and use it as a rental as long as the one they bought to receive the $6500 becomes their primary residence.
Chuck Strauss
Keller Williams DTC
720-318-7598
CStrauss@kw.com
1 vote Thank Flag Link Thu Jul 29, 2010
I don't think you have a tax incentive still in effect. I know the deadline was extended but you had to be under contract at the extension time. I may be wrong. Like I said as I understand it.
Web Reference: http://www.mikekrieg.com
1 vote Thank Flag Link Thu Jul 29, 2010
You guys who answered recently are funny especially Mr. Kurt Thomas. I referred them to their CPA who said he didn't know. Go figure....Anyway, it appears the answer is yes with contingencies. thanks to all of you that tried to help....
C
0 votes Thank Flag Link Fri Jul 30, 2010
The correct answer is that you may retain ownership of your current primary residence and use it as a rental, or a second home for that matter, provided that you claim the new home as your primary residence after the purchase closes.

As always, I recommend to all my clients to seek the professional advice of a CPA.

Chip Parrish
Broker / Co-Owner
RE/MAX of Cherry Creek
Web Reference: http://urbanlife5280.com
0 votes Thank Flag Link Thu Jul 29, 2010
Simple answer: no they don't; and yes they can (use previous primary residence as a rental).

Tim Klein
Broker
Metro Brokers - The Realty Werks
303.973.7600
0 votes Thank Flag Link Thu Jul 29, 2010
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