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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?
