Recently, I had two homebuyers come to our seminar for First-Time Home Buyers who plan to buy a home this year. They want to take advantage of the record-breaking drop in home prices, the record-breaking low interest rates and the first time ever tax credit for first-time homebuyers.
They asked me if they could split the tax credit. Well, at the time, I didn’t know the answer to that question but God Bless America. The IRS website at IRS.gov had an answer for their question. Of course, you know the IRS!! The answer WAS NOT short but basically it said this.
Of course you can split the one-time $8000 tax credit. But you should be sensible about it. For example, if you and a fiancé bought your first home together, and you each paid ½ of the down payment, you could split the tax credit 50/50 each taking ½ of the credit. Or let’s say you paid cash for a home and you contributed $25,000 and your partner contributed $75,000 towards a $100,000 home. You could split the credit taking 25% or $2000 for yourself and giving 75% or $6000 for your partner.
Or let’s say that your partner has been out of work for a year and thus doesn’t owe any taxes but you are self-employed and will owe $6000 at the end of the year. In this case, it may make sense for you to take the whole tax credit to offset your taxes. You would still get a check for the difference of $2000. You can make the credit work for you…just have some sensible explanation to give the IRS.
For more detailed information, come to our FREE NO OBLIGATION FIRST TIME HOMEBUYER class or wait for future blogs. “Simple answers to home ownership questions”.