Hello Jajlies,
I would call a good bank and ask them. You can call 36-750-3050 Carolyn Poppino @ Chase. Ask her the question and see what she says. I don't think it will work, just knowing the banks are not involved may jepordize the credit.
Carolyn is awesome. Give her a call and tell her Patty Bergren referred you and she will help.
Good luck,
Patricia Bergren
Coldwell Banker United Brokers
360-798-6733

Jaj,

This is a good question and one probably best referred to your CPA.

Good luck

Here is a list of scenarios that do not qualify for the credit, taken directly from the IRS site. I have placed some marks next to the second answer which describes your scenario. visit: http://www.irs.gov/newsroom/article/0,,id=206291,00.html to read the information on the IRS site for yourself.

Q. Who cannot take the credit?

A. If any of the following describe you, you cannot take the credit, even if you buy a new home:

Your income exceeds the phase-out range. This means joint filers with MAGI of $170,000 and above and other taxpayers with MAGI of $95,000 and above.

***You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild.

You do not use the home as your principal residence.

You sell your home before the end of the year.

You are a nonresident alien.

You are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year. (This does not apply for a home purchased in 2009.)

Your home financing comes from tax-exempt mortgage revenue bonds. (This does not apply for a home purchased in 2009.)

You owned a principal residence at any time during the three years prior to the date of purchase of your new home. For example, if you bought a home on July 1, 2008, you cannot take the credit for that home if you owned, or had an ownership interest in, another principal residence at any time from July 2, 2005, through July 1, 2008.