Academic journal article Journal of Accountancy

Homebuyer Credit Denied Where Former Home Still in Use

Academic journal article Journal of Accountancy

Homebuyer Credit Denied Where Former Home Still in Use

Article excerpt

A house that a married couple continued to use while trying to sell it was their principal residence during that period; therefore, they did not meet the timing requirement to qualify for an $8,000 first-time homebuyer credit when they purchased a new house, the Tax Court held.

Francis and Maureen Foster put their former residence on the market in February 2006, and they began spending most of their time at Mrs. Foster's parents' house. The sale of the old house was finalized on June 6, 2007. They purchased a new house on July 28, 2009.

The Fosters claimed an $8,000 first-time homebuyer credit on their 2008 tax return, which the IRS denied.

Under Sec. 36(c), a "first-time homebuyer" was defined (the credit expired in 2010) as any individual who had had no present ownership interest in a principal residence for three years prior to the date of purchase of the principal residence for which the credit was being claimed.

The Fosters argued that they had stopped using their former house as a principal residence in February 2006 and therefore met the three-year period. …

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