Homebuyer Credits and Married Couples

Yesterday I talked about how the Homebuyer Tax Credits work for unmarried people who purchase a home together. Today, I will discuss how the credits work for married couples. As mentioned yesterday, the rules are generally more generous to unmarried people who buy a home together than to married couples who buy a home.

The biggest hurdle that a married couple faces with the Homebuyer Credits is that both spouses must qualify for the same credit in order for the couple to receive the credit. If one spouse qualifies for the first-time homebuyer credit and one spouse qualfies for the long-time homeowner credit, then neither credit is available to the couple.

The qualifications for the first-time homebuyer credit are more straightforward, so I'll start with that. This credit is available to anyone who has not owned a home in the last three years. For a married couple, both spouses would have to have not owned a home in the last three years in order for the couple to qualify.

The qualifications for the long-time homeowner credit are that you must have owned and lived in teh same home for at least five years out of the last eight years. Note the emphasis on "same home." For a married couple to qualify for this credit, both spouses must have had an ownership interest in, and lived in, the same home.

EXAMPLE: "A" and "B" were married in 2009 and they buy a home together in 2010. Prior to buying the new home in 2010, they lived in the house "A" owned. "A" had owned and lived in this house for six years; "B" had never owned a home before. Even though "A" meets the requirements for the long-time homeowner credit and "B" meets the requirements for the first-time homebuyer credit, they cannot claim either credit, because they don't both meet the requirements for either credit.

Confusing? If you think you might qualify for the credit or if you have any questions, you should seek the counsel of a qualified tax professional such as myself.

This article does not constitute tax advice. Because each person's situation is unique, you should consult with a tax advisor before making any decisions.