Gloria Posted September 24, 2009 Report Share Posted September 24, 2009 A taxpayer purchased a home and last year the parents added the son's name to the title (to avoid probate in the future) on their home. Would that disqualify the son from the credit based on the information bellow? The son did not inherite the home as the parents are alive but now that the son is listed on the title--does that fall under ownership interest --- see information bellow? Also, up to the time of the purchase, the son was living in the parent's home. Thanks in advance for your thoughts and comments. Q. Does previously inheriting a home and living in the inherited home automatically disqualify an individual as a first-time homebuyer with respect to a different home that is purchased within the prescribed 2008 and 2009 time frames? A. Yes, an ownership interest in a prior principal residence would preclude the taxpayer from being considered a first-time homebuyer. As long as the taxpayer owned and used the prior home as his principal residence, then he is not a first-time homebuyer. There is no exception for taxpayers who did not buy their prior residences. (05/06/09) Quote Link to comment Share on other sites More sharing options...
Lion EA Posted September 25, 2009 Report Share Posted September 25, 2009 Sounds like the son has an ownership interest in the home that was his principal residence. Did the parents file a gift tax return? Quote Link to comment Share on other sites More sharing options...
Gloria Posted September 25, 2009 Author Report Share Posted September 25, 2009 Sounds like the son has an ownership interest in the home that was his principal residence. Did the parents file a gift tax return? No -- I do not know much about gift taxes. The parents are still the owners and are still listed on the title; they added the son's name to the title. So would there still be a gift tax? Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted September 25, 2009 Report Share Posted September 25, 2009 A taxpayer purchased a home and last year the parents added the son's name to the title (to avoid probate in the future) on their home. Would that disqualify the son from the credit based on the information bellow? The son did not inherite the home as the parents are alive but now that the son is listed on the title--does that fall under ownership interest --- see information bellow? Also, up to the time of the purchase, the son was living in the parent's home. Thanks in advance for your thoughts and comments. Q. Does previously inheriting a home and living in the inherited home automatically disqualify an individual as a first-time homebuyer with respect to a different home that is purchased within the prescribed 2008 and 2009 time frames? A. Yes, an ownership interest in a prior principal residence would preclude the taxpayer from being considered a first-time homebuyer. As long as the taxpayer owned and used the prior home as his principal residence, then he is not a first-time homebuyer. There is no exception for taxpayers who did not buy their prior residences. (05/06/09) Seems pretty clear to me. Quote Link to comment Share on other sites More sharing options...
Gloria Posted September 25, 2009 Author Report Share Posted September 25, 2009 Seems pretty clear to me. Thanks -- It is clear but I wanted to double check with this board's expertise being that the house "really" belongs to the parents but I guess "legally" it belongs to the son as well. Thanks again. Quote Link to comment Share on other sites More sharing options...
jainen Posted September 25, 2009 Report Share Posted September 25, 2009 >>the house "really" belongs to the parents<< I hope you don't say that to your clients, because it is wrong. They could have avoided probate by putting the house into a living trust. Instead, they chose to make their son a co-owner. Quote Link to comment Share on other sites More sharing options...
Gloria Posted September 25, 2009 Author Report Share Posted September 25, 2009 >>the house "really" belongs to the parents<< I hope you don't say that to your clients, because it is wrong. They could have avoided probate by putting the house into a living trust. Instead, they chose to make their son a co-owner. No -- actually I spoke with them (the parents & son) and I told them that more than likely the son would not qualify because he was on the title - but that I would do some research. What is ironic is that last year they were thinking about preparing a living trust (they had ordered the Suzie Orman living trust kit--I know because I borrowed the book and the disk---the disk can be legally shared with friends). Instead they added the son to the title---Anyway that was an $8,000 mistake. Quote Link to comment Share on other sites More sharing options...
jainen Posted September 25, 2009 Report Share Posted September 25, 2009 >>that was an $8,000 mistake<< I can't call it a mistake except that their legal advice was kind of a self-help thing. It is entirely possible that with qualified planning there would be perfectly good reasons for what they did. We usually advise people to follow the law as it exists at the time, and in 2008 they would have expected to repay such a credit. Quote Link to comment Share on other sites More sharing options...
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