A Little Discrimination in the 2010 Home Buyer Tax Credit?
It’s very late in the game with the 2010 home buyer tax credit, the finish line is only days away. My purpose in mentioning this issue now is so something like this doesn’t happen again. The next time Congress enacts a piece of legislation such as this, there shouldn’t be any discrimination against people because they’re newly married.
My team is working with a home buyer who just discovered he and his wife are not eligible for the 2010 home buyer tax credit. He qualifies for the repeat home buyer tax credit because he’s owned his home for more than 5 years. He married 3 years ago, so his wife does not meet the 5 year rule to qualify. She, of course, is eligible for the first time home buyer tax credit, but he is not.
Here are some questions and answers about this very issue from the National Association Of Home Builders website’s frequently asked questions. In addition, I checked out H.R. 3548, the bill that included the tax credit, (it’s in Section 11), but it really tells you nothing.
For married taxpayers, the law tests the home ownership history of both the home buyer and his/her spouse. That is, both spouses must qualify as long-time residents, with at least five years of principal residency for each.
Does a married couple qualify for any home buyer tax credit in the following situation? Spouse A has lived in and owned the same principal residence for at least five years. Spouse B has lived in and owned the same principal residence for less than five years.
In this situation, the couple does not qualify for any home buyer tax credit. Because the couple is married, the law tests the ownership history of both spouses. Spouse A clearly does not qualify for the $8,000 first-time home buyer tax credit, so neither does Spouse B.
Ironically, if they weren’t married, they could qualify:
How can two unmarried buyers allocate the tax credit if one qualifies for the $8,000 first-time home buyer tax credit and the other qualifies for the $6,500 repeat home buyer credit?
The buyers can allocate the tax credit in any reasonable manner, provided neither claims a tax credit higher than the one they qualify for and the home purchase does not yield a total of more than $8,000 in tax credits. For example, the repeat home buyer could claim $6,500 and the first-time home buyer could claim $1,500. Alternatively, both buyers could claim a $4,000 tax credit.
The language is very much the same with regard to the first time buyer tax credit:
- How can two unmarried buyers allocate the tax credit if one qualifies for the $8,000 first-time home buyer tax credit and the other qualifies for the $6,500 repeat home buyer credit?
The buyers can allocate the tax credit in any reasonable manner, provided neither claims a tax credit higher than the one they qualify for and the home purchase does not yield a total of more than $8,000 in tax credits. For example, the repeat home buyer could claim $6,500 and the first-time home buyer could claim $1,500. Alternatively, both buyers could claim a $4,000 tax credit. - Does a married couple qualify for any home buyer tax credit in the following situation? Spouse A has lived in and owned the same principal residence for at least five years. Spouse B has lived in and owned the same principal residence for less than five years. In this situation, the couple does not qualify for any home buyer tax credit. Because the couple is married, the law tests the ownership history of both spouses. Spouse A clearly does not qualify for the $8,000 first-time home buyer tax credit, so neither does Spouse B.
Spouse A does appear to qualify for the $6,500 repeat buyer credit, but because Spouse B has not owned and lived in the same principal residence for at least five years, neither of them can claim the repeat home buyer tax credit.
So, please tell elected officials not to discriminate against married, unmarried or newly married people. Everyone should have had an equal opportunity for the home buyer tax credit.
What do you think?
Is The Seattle Eastside Home Sales Race Soon to Be On?
Everyone who has wanted to sell on Seattle’s eastside in the last few years seems wants to sell in the next 60 days, including me.
I know some home sellers Angie Bondurant, my business partner, and I will be representing have been madly getting their homes ready to sell. I bet contractors on Seattle’s eastside are busier than they’ve been in a long time. The contractor I use has gone from working on a rental home I plan to sell to a client’s home. As home seller wanna-bes, we’re all in the same boat, scrambling to meet the looming deadline of April 30th. We’re hoping to catch that home buyer who wants to get the benefit of the 2010 home buyer tax credit. (By the way, I don’t think the market will fall apart after April 30th, 2010, but those thoughts will be for another post)
Right now, the number of homes and condos for sale in King County is doing it’s normal spring time creep up (yes, it’s spring here in Seattle). So far, the number of properties for sale isn’t unusually high.
In some of the Seattle-eastside neighborhoods where I’ve sold a lot of homes and which I blog about, I’ve talked about the fact that there are fewer homes on the market. I think that may be changing and I am wondering if others are experiencing the same thing.
Are other Realtors seeing the same thing happening with their business?
Do you have more homes coming up for sale in the next 60 days?
Do you expect to sell more homes or condos in the next 60 days because of the tax credit?
Are home owners seeing more “For Sale” signs popping up in their neighborhoods?