Gail in Virginia Posted March 1, 2010 Report Share Posted March 1, 2010 It seems to me that a long time ago I read something in an IRS FAQ about this credit, but now I can't find it. A college student has purchased a condo near her college. This is her first home purchase, and in all respects she qualifies for the first time home buyer credit BUT... She is renting the extra bedrooms in the condo to other college students. It is a three bedroom unit, and she is renting two of the bedrooms at a fair rental value. They share the common areas - kitchen, living room, etc. She called the IRS and whoever she got on the phone seemed to think that this would not disqualify any portion of the purchase price from the FTHB credit. Obviously, I would prefer a more definite citation. It seems to me this is now at least partially rental property and 2/3 of the purchase price would not qualify for the credit. But as far as the information the IRS requests in support of the credit (HUD statement, bills or paystubs at that address) there is no problem providing that. I don't want to cheat her out of the credit but I don't want to take an indefensible position. Any ideas? Quote Link to comment Share on other sites More sharing options...
TAXBILLY Posted March 1, 2010 Report Share Posted March 1, 2010 My link TAXBILLY Quote Link to comment Share on other sites More sharing options...
Pacun Posted March 2, 2010 Report Share Posted March 2, 2010 " Q. I purchased a home that qualifies for the first-time homebuyer credit. I will be renting two of the bedrooms and reporting the rental income on Schedule E. Will I still qualify for the credit if I use the home as my principal residence? A. Yes, if you meet all first-time homebuyer eligibility requirements. See Form 5405, First-Time Homebuyer Credit, for more details." I bet you that even if the answer is NO for the above question, you still have a chance... what was the intent of the student? To purchase a rental property or to purchase a place to live while in school? So, your client qualifies for the $8K using the whole cost of the three bedroom condo. If you buy two separate structures, like a duplex, and you rent one and you live on the other, then you have to split the cost. Quote Link to comment Share on other sites More sharing options...
Gail in Virginia Posted March 2, 2010 Author Report Share Posted March 2, 2010 Thank you both. Quote Link to comment Share on other sites More sharing options...
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