I am a newbie and not quite sure if this is the right category to ask my question.
I bought a condo using the $7500 tax credit in 2008. Now I want to transfer the title to a family member who is over 65 years old to save on tax. This condo is my primary residence and I bought it all cash. My questions is: will my family member need to pay for the $7500? Or it will still my responsibilities?
Thanks for your answers in adance!
This is just my understanding, so follow it up–
You bought the house as owner-occupant, and you need to stay there for 3 years or you will owe the IRS the pro-rated amount for those months you were not there.
Furnishedowner
furnishedowner’s answer applies to the $8000 first time homebuyer tax credit that was available in 2009 and 2010. The full amount of the credit received becomes due on the return for the year the home is sold or ceased being your principal residence if your owner-occupancy period following the purchase is less than 36 months. There is no proration
The $7500 tax credit that you received in 2008 is not really a tax credit but rather an interest free loan from the IRS that has to be paid back in 15 equal installments paid annually beginning with your 2010 tax return. The credit is collected as an additional tax on your federal tax return. Refer to the instructions for Form 5405 for more guidance.
If you sell the property before you have repaid the full credit, all of the unpaid installments will be due on your tax return for the year of the sale. Even if you sell the property to a related party, you would still be responsible for repaying the tax credit.
Consult your CPA or tax advisor for specific details.
Your question sounds like you are trying to get a property tax homestead exemption that is available to seniors. I believe the senior citizen has to only be on title so you could add your family member to the title without it constituting a sale. As long as you continue to occupy the property as your primary residence, you would continue to repay the tax credit in annual installments just as you would if you were the sole owner.
The pitfall here is that you probably won’t get the senior citizen property tax reduction unless your senior family member is actually occupying the home as his/her primary residence.
Check with your county property tax assessor’s office or treasurer’s office to confirm the specific requirements to qualify for the senior citizen property tax discount.
Way more complicated than I thought!
Thanks for giving much clearer advice, Dave T.
Furnishedowner
Dave T is THE MAN…when he talks, folks (especially the newer ones) should listen. He always provides, sound, timely advice!
Keith