Financial Planning for Generation X & Y Women
 
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Expert Q&A Archive

02/05/2010
How will the first-time homebuyer credit affect me when filing taxes?
I have a question regarding the tax repercussions for the first-time homebuyer credit. I am planning on purchasing a home by April so that I can get the full credit; however, I also plan on getting married next year. And my fiancé already owns a condo, so he is not eligible for the full credit.

A) If I purchase it only in my name, does it matter as far as when we file our taxes that we are then married when tax time comes.

B) Does it matter that I am only purchasing it in my name before our marriage?
Karen Bolaji Fisher:
expert info »
This website will answer your questions regarding the 1st time home buyer tax credit: http://www.federalhousingtaxcredit.com/faq1.php

By the way, if you marry your fiancé in 2011, it would not affect you getting the tax credit, since you will purchase a home in 2010, when you are single. When you file your 2010 tax return in 2011, you will not be filing as married.
Gail Rosen, CPA:
expert info »
The questions and answers posted by the IRS on January 27, 2010, at.
http://www.irs.gov/newsroom/article/0,,id=218698,00.html answer the question posed
Jody Rorick, CPA:
expert info »
A) Your filing status is determined on the last day of the year, so if you're not married in 2010, your filing status is single. It doesn't matter that you then became married in early 2011 and are married at "tax time."

B) No, it doesn't matter. It will be titled in your name only, that's all.
Rosemary Ervin, CPA:
expert info »
The following is from First-Time Homebuyer Credit: Scenarios at http://www.irs.gov/newsroom/article/0,,id=206294,00.html on the IRS website:

"If a single person (Taxpayer A) qualifies as a first-time homebuyer at the time he/she purchases a home with someone (Taxpayer B) that is not a first-time homebuyer and then later that year they marry each other, is the credit still allowed?

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."

The operative clause here is: "eligibility" which is determined on the date of purchase. Accordingly, if you are a single first-time homebuyer when you close, but a married taxpayer when you file the tax return, you qualify based on your marital status when you purchased your home.

Note: Your filing status is determined on December 31st of each year. You are either married or single on that day, not on April 15 of the next year. If you do not marry until 2011 and purchase the home in April 2010, then you will file your 2010 Form 1040 as single. You will qualify for the credit, assuming you meet the other parameters--modified adjusted gross income less than $125,000 for the full credit, phase out of a reduced credit at $145,000, and you close within the appropriate time….
 

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