Jeff -

No, this will not disqualify you from the tax credit. You did not mention what your living situation was outside of the house your wife inherited was. If you have never owned a primary residence and wish to buy one, you will qualify for up to $8000. If you've lived in a primary residence 5 out of the past 8 years then you qualify for $6500 on your next purchase as long as your offer is accepted by the end of April and closed by the end of June, 2010.

Hey Jeff,
There's a great video explaining the 1st Time Homebuyer Tax Credit on my website. http://www.yourhomeloanpartners.com look under the video's tab, it's easy to find. If you have further questions, please feel free to contact me.

Cecelia Marlow
PanAmerican Mortgage, LLC
Senior Mortgage Consultant
773-782-6000

Hi Jeff.... The govt. has passed the $6,500 tax credit for those who reside in a home for 5 years or more.
My team can assist you with real estate needs especially since we have "Unheard of Real Estate Rebates" and various programs!! http://ChicagoCityHomeSales.com

My no. is 312.523.8174. Call anytime especially regarding real estate needs, please and thank you!!

Tony, the $6500 tax credit, if it passes and is signed, will have restrictions including primary residence and length of time home was owed/occupied. 5 years, I believe - so, the move up tax credit would not apply to someone that sold a home never occupied by her nor owned for 5 years.

Jeff - if I'm reading the question right, you're looking to see if now you and your wife can buy another house for yourselves, and asking if you would qualify for the 1st time buyer credit on the new purchase?

Since it sounds as though neither one of you lived in the house as your primary residence, I believe you'd qualify for 1st time buyer status on a new purchase, based upon what the IRS specifically says about just this question. (As long as you otherwise qualified, ie income levels, etc.)

However, it would be good to consult an accountant versed on the tax credit or even the attorney who assisted int he estate work, since I'm neither an accountant nor an attorney.

From the IRS, with linkage below:

Q. Does previously inheriting a home and living in the inherited home automatically disqualify an individual as a first-time homebuyer with respect to a different home that is purchased within the prescribed 2008 and 2009 time frames?

A. Yes, an ownership interest in a prior principal residence would preclude the taxpayer from being considered a first-time homebuyer. As long as the taxpayer owned and used the prior home as his principal residence, then he is not a first-time homebuyer. There is no exception for taxpayers who did not buy their prior residences. (05/06/09)

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

Probably best to talk with IRS, your accountant. With congress considering extending the tax credit but changing the amount to $6,500 for other than 1st time buyers there should not be aconcern other than the $1,500 difference in the credit.

You would need to talk to your tax advisor/CPA or attorny to get information on tax issues as Realtors are not qualified to provide tax advice. That said, it is my understanding that if you were to inherit a home it would be the same as purchasing your first home which would qualify you for the first time buyer tax credit. Most likely if you inherited a property and then sold it you are going to have some sort of capital gains and the first time buyers federal tax credit could be used to offest the amount owed. Please contact your tax advisor to reveiw your situation in order to file correctly. I hope this info helps!

Best regards, Dave

David Westall, Realtor
DRE# 01796995
Tahoe Riverfront Realty, Inc.
david@WestallRealEstate.com