How can I find out if I owned a house before I was married and now have married and now my husband wants to buy a house can he qualify for the 8,000 rebate. We have a tax friend who tells us no as he is still considered an owner. What do you guys think? How can he be penalized for me buying a home before we were married in my name and not his?? :help :help
The tax credit is 10% of the purchase price up to $8000. A married couple must both qualify as first time homebuyers to receive the full tax credit. If only one qualifies, or if he files as “married filing separately”, then only half the credit is available to the eligible spouse (5% of the purchase price up to $4000).
If you and your husband are getting divorced and he will be single at the end of this year, then he can buy a house in his own name, occupy it as his primary residence, and claim the full tax credit next year when he files his tax return.
To be eligible for the tax credit, the house must be occupied by the first time homebuyer as a primary residence. When you say your husband wants to buy a house (rather than “we” want to buy a house), are you suggesting that the house your husband wants to buy will be used for something other than a primary residence? If the answer is yes, then the property does not qualify for the tax credit.
We want to buy a house in his name only as I had a condo before we met that I bought only in my name and I havent lived in it for 2 years, we are on base in the military, but my friend says if my husband tries to get the rebate they will say he is also an owner of the condo??? even though its in my name because we are married.
Basically… what you guys need to do is…
Get divorced, get the whole tax credit, then get remarried (if you still love him).
Isnt it funny how things get when Government gets involved? :rolleyes
Yeah, the govt is really involved in their lives anyway. Guess your husband would lose his BAH w/ dependents unless you have kids involved. Then he’d get single BAH and BAQ diff as well. It’d be a hassle to mess with all that for the credit.
Your friend’s reasoning is off, but the general message is mostly correct. For a married couple to get the FULL tax credit, both spouses must be first time homebuyers. Does not matter if ownership is titled to only one spouse. You not a first time homebuyer because you did own a “main home” within the past three years.
A main home is defined as a property used as your primary residence. If you have been using your former home as a rental for at least 32 months, then it is possible that you can qualify for first time homebuyer status under the three year rule before the tax credit expires. Then your husband (or both of you) can purchase a new primary residence before Dec 1, 2009 and get the full tax credit next year when you file your tax return.
When only one spouse qualifies for the tax credit, then only half the tax credit is available. If you can not reinstate your first time homebuyer status in time, your husband can still purchase a new primary residence in his name and qualify for a partial tax credit up to $4000.
Consult your tax advisor for specific details. Maybe the base legal office has a tax expert on staff who can help you clarify your options.
Back in the 1980s, when the marriage tax penalty was much greater than it is today, dual income married couples would divorce in December, then remarry in January the next year. Since each was legally single on Dec 31 of the tax year, they filed their tax returns as single persons for the entire tax year and got a better tax treatment than they would have as a married couple filing a joint tax return.
I would not consider purchasing a property that you may not keep at least three years. If there is a chance that you and your husband will be transferred and have to vacate the house in the next couple of years, he will have to repay the tax credit since he won’t achieve at least three years of occupancy as a primary residence after purchase.
Without the tax credit, you may need at least five years of appreciation to break even if you have to sell the property once selling costs and sales commissions are paid.
My caution here is to not get too enamored with the tax credit. Purchasing a new home right now may not be the best investment decision in spite of the tax credit.
Justin,
Since ruready and her husband occupy base housing, he does not receive BAH. I know that he could still occupy base housing and receive BAH if he were on an unaccompanied tour and they are still maintaining the primary home for ruready. Once the divorce is final, his entitlement to BAH for his offbase spouse ends if he continues to occupy base housing. I admit that I do not know whether dependent children changes his entitlement.
If they move off base into their own home, then he can start receiving BAH. Could be that the housing allowance will be large enough to cover the loan payment.
I have owned it for 8 years and renting it out now but not for 32 months. Could my husband get half or 4000 if he buys it in his name only? Thanks. We are staying here and not moving so we want to buy home off base.
Dave,
In the event of a divorce, the dependent children would give him an entitlement for BAH w/o dependents and BAQ diff which seems to total about the same amount as BAH w/ dependents. This is the way it was a few years ago.
You’re right about not receiving BAH while in base housing. I should’ve read that closer. I was trying to make light of how the hassles of govt forms & such probably wouldn’t make it worth their while to divorce for the tax credit.
Apparently not. I had said earlier that your husband could qualify for a partial credit, but new clarifying information posted on the IRS website specifically requires a married couple to both ble first time homebuyers to claim the credit. It is all or nothing for married couples. Here is a FAQ posted on the IRS website.
S4. If husband and wife wanted to sell the home that the wife owned when they got married, and the husband had not owned a home within the past three years, could he qualify as a first-time homebuyer for the credit even though the wife would not qualify?
A. No. The purchase date determines whether a taxpayer is a first-time homebuyer. Since the wife had ownership interest in a principal residence within the prior three years, neither taxpayer may take the first-time homebuyer credit. Section 36(c)(1) of the Internal Revenue Code requires that the taxpayer and the taxpayer’s spouse not have an ownership interest in a principal residence within the prior three years from the date of purchase. The husband may not take the credit even if he filed on a separate return.
The IRS website also covers the divorce situation. The taxpayer’s eligibility for the tax credit is determined at the time of the purchase. If a single person is a first time homebuyer and purchases a primary residence, then later in the year marries someone who would not qualify, the full tax credit is still available because at the time of purchase the buyer was a qualfiied first time homebuyer.
In your situation, you and your husband will have to get divorced before he purchases the home. You can remarry later after the home is purchased, and your husband will still be entitled to the full tax credit.
A divorce might have a drastic affect on your retirement benefits. Check that out carefully.
(The spouse gets no health care benefit unless he/she was married to the military member the entire service career. He/she can spend 19.9 years married, and still only be on the spouse’s health care insurance, and lose all benefits in a divorce)
But if they remarry, all spousal benefits are reinstated.
both must be first time homeowners.
36 months is the clock.
you just need to close 36 months plus 1 day after you converted the condo to a rental.