Home Buying in 48128>Question Details

Dj, Both Buyer and Seller in 48128

Would I qualify for the $8k FirstTime HomeBuyer Tax Credit if my fiancee cosigns and already owns a house?

Asked by Dj, 48128 Wed Feb 18, 2009

I am currently in this situation and would like to know if it is worth trying to buy a house before marriage. Thanks

Dick and Jane are currently engaged and are getting married this summer. Dick already owns a house. Jane still lives with her parents and has never owned a house. Before they get married, Jane buys a house and Dick cosigns.

Q1: Jane doesn't make enough to buy the house on her own. Is only Jane's income taken into consideration for income limit qualification, or is the cosigner's income also used? Dick and Jane combined are way above the $75k income limit. (I think Dick and Jane are ok here per http://www.federalhousingtaxcredit.com)

Q2: When they file their 2009 taxes (I assume they have to file as married, separate) does Jane still qualify for the $8,000 first-time home-buyer credit? Even though they are married now, when Jane bought the house she was single and a first-time home-buyer.

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Dj, if you don't personally make enough to buy the house on your own, then you will need another party to qualify. Whomever that party is they use their name and income. The tricky part is since together you make over the income maximum but you are not married whether or not you'll still qualify for the tax credit. I believe this is best asked to a tax preparer. But please pop back on here and let me know what you find out....great question that I could learn from!
1 vote Thank Flag Link Wed Feb 18, 2009
No, you will not qualify if he's on the deal as well. See below. The home would need to be in your name only.

FIRST-TIME HOMEBUYER TAX CREDIT
As Modified in the American Recovery and Reinvestment Act
Major Modifications Shaded
February 2009

FEATURE
CREDIT AS CREATED JULY 2008
APPLIES TO ALL QUALIFIED PURCHASES ON OR AFTER APRIL 9, 2008

REVISED CREDIT –
EFFECTIVE FOR PURCHASES ON OR AFTER JANUARY 1, 2009 AND BEFORE DECEMBER 1, 2009
Amount of Credit:
(08) Lesser of 10 percent of cost of home or $7500
(09) Maximum credit amount increased to $8000

Eligible Property
(08) Any single family residence (including condos, co-ops, townhouses) that will be used as a principal residence.
(09) No change All principal residences eligible.

Refundable
Yes.

Reduces (or can eliminate) income tax liability for the year of purchase.
(08)Any unused amount of tax credit refunded to purchaser.
(09)No change --Purchasers will continue to receive refund for unused amount when tax return is filed.

Income Limit
(08) Yes. Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return).
Phases out above those caps ($95,000 and $170,000).
(09) No change -- Same income limits continue to apply.

First-time Homebuyer Only
(08)Yes. Purchaser (and purchaser’s spouse) may not have owned a principal residence in 3 years previous to purchase.
(09)No change - Still available for first-time purchasers only. Three-year rule continues to apply.

Revenue Bond Financing
(08)No credit allowed if home financed with state/local bond funding.
(09)Purchasers who utilize revenue bond financing can use credit.

Repayment
(08) Yes. Portion (6.67% of credit or $500) to be repaid each year for 15 years, starting with 2010 tax filing.
(09) No repayment for purchases on or after January 1, 2009 and before December 1, 2009

Recapture
(08)If home sold before 15-year repayment period ends, then outstanding balance of repayment amount (09)recaptured on sale. If home is sold within three years of purchase, entire amount of credit is recaptured on sale. Applies only to homes purchased in 2009.

Termination
(08) July 1, 2009
(09) December 1, 2009


Effective Date
(08) Purchases on or after April 9, 2008 and before January 1, 2009. Repayment to begin for 2010 tax year.
(09)All revisions are effective as of January 1, 2009
0 votes Thank Flag Link Wed Feb 25, 2009
DJ,

This legislation is so new that I don't think anyone here has seen much more on it than you have. We are also not tax advisers and your question is very specific. I think you are going to have to get advice from a tax adviser, since I would hate to have you make such a big purchase and have incorrect information.

On the one hand, you don't have to be on the title, you could be just on the mortgage. But I am not sure how they will treat you as being unmarried when you bought it but married when you file your taxes. If you waited to get married until after Jan 1, maybe there would be no issue. But I am not a tax expert and I really have no idea how it will be handled.

Very interesting scenario though! People will definitely be looking for creative ways to access this money.
Web Reference: http://mioaklandcounty.com
0 votes Thank Flag Link Wed Feb 18, 2009
Maureen Fran…, Real Estate Pro in Birmingham, MI
MVP'08
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