Discussion:Substantial authority for 1st-timer hypotheticals on irs.gov
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Discussion Forum Index --> Basic Tax Questions --> Substantial authority for 1st-timer hypotheticals on irs.gov
Discussion Forum Index --> Tax Questions --> Substantial authority for 1st-timer hypotheticals on irs.gov
| 8 February 2010 | |
| I apologize for asking a question about what has become an abominable topic overloading the forum. That said, I merely hope that someone knows off-hand the reg citation (or other substantial authority) for the following scenarios as posted by the IRS (FTHB - more FAQ).
A. Eligibility for the first-time homebuyer credit is determined on the date of purchase. If Taxpayer A, a first-time homebuyer, buys a house and then later that year marries Taxpayer B, not a first-time homebuyer, the credit is allowable to Taxpayer A. Taxpayer A may take the maximum credit. S2. Taxpayer A is a single first-time home buyer. Taxpayer B (parent) cosigns for A and does not qualify. Both names are on the mortgage. Can Taxpayer A claim the credit and, if so, how much? A. Yes. Taxpayer B is not a first-time homebuyer and cannot claim any portion of the credit, but A may claim the entire credit ($7,500 for purchase in 2008; $8,000 for purchase in 2009), if the home was purchased as Taxpayer A's primary residence. | |
| 9 February 2010 | |
| Thanks R2. I could have sworn that the IRS initially issued guidance that required allocating. I guess my brain is making things up again! 36(c)(1) clearly anticipates further regulations concerning allocations - any idea if the example on the website ("S1") is set forth in a reg? | |
| 9 February 2010 | |
| No, I don't believe that regs have been issued. However, see Notice 2009-12. | |
| 18 February 2010 | |
| Following up on my previous post, the facts are as follows: my client is engaged to be married in July. He and his fiance are going to buy a home this month. My client does not qualify for the Sec 36 tax credit, but his fiance would qualify. Suppose the client provides the funds for down payment and the both the client and fiance are co-signers on the promissory note; however, only the fiance is listed on the title. How would this play out on their 2010 joint return? Unfortunately the fiance had little income in 2009, so it's not feasible for her to retroactively take the credit on her 2009 return.
The IRS website provides that in this same scenario, the qualifying spouse may take the credit even through the couple gets married in the same year. However, it does not clarify whether the spouses would be allowed to take the full amount of the credit on their joint return. Alternatively, the example could be presuming that the question really asks "Can the qualifying person take the credit retroactively in the year before marriage on his or her return?" Likewise, the second example on the website provides that a person is allowed to take the credit where his mother co-signs the note. But again, this can not be extended to a scenario where the co-signer is also an occupant, and further where the co-signer is a party to the joint return on which the credit is taken. R2 pointed me to Notice 2009-12, which addresses situations where two non-married persons buy a home as tenants in common. However, it does not address a situation where the two persons marry before the end of the taxable year. The notice also seems to set forth a policy of allocating based on the source of funds used for the down payment coupled with the liability of each party under the note. Where A & B buy a home for $100,000, and A contributes the $10,000 for the down payment, and A&B are jointly liable for the $90,000, the Notice provides that A should take 55% of the credit. So now my question: Even though there seems to be little if any substantial authority that answers my question, does anyone have any thoughts on the best way to structure the transaction in anticipation of what you believe to be the law in effect when we're doing the 2010 returns next year? Any advice will be appreciated. | |
