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May 22, 2009


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If two taxpayers buy a house that qualifies for the tax credit, the credit they may claim is proportional to their ownership interest in the house. For example, if your ownership is 50-50, you may each take one-half of the available credit.

As a side not, I own my home and will be getting married in October. I thought about selling the house to my Fiancee so that she could claim the tax credit. Unfortunately, I don't think she makes enough to qualify for the loan. Besides the ethics of the whole issue, do you think this would work, legally?

Jason --

Interesting. Don't know if it would work -- I'd ask my CPA first and find out.


Ethics aside, it does work. I know a couple that closed on the deal literally days before their wedding and already claimed the credit.

Besides, if you're using the money for repairs and upgrades, that is the intended use of the money, right? Don't see why it would be unethical.

My wife and I went through this a few months ago with the $7500 interest-free loan version. Two disclaimers: the rules may be different for the two versions of the credit, and my memory may be faulty about how the rule worked for my credit. But here's what I remember.

1. If you are unmarried and both of you are eligible, you can split the credit however you wish between the two of you. There is no way to take two credits; you simply split the $8000. There may be circumstances under which you would want to do this.

2. If you are unmarried and only one of you is eligible, only that partner can take the credit. I think the credit that partner can take may be pro-rated based on how much money each partner brought to the house, but I don't remember.

3. If you are married and only one of you is eligible, I can't remember if the couple is eligible or not.

4. If you are married and both are eligible, the couple is eligible. I believe that you have to file jointly.

For your case, if each of you owed money, I guess you could remain unmarried and split the credit so that neither of you would have to write a check and that you would only get one check from the feds. But at that point, it would probably be preferable to get married and file jointly (unless there is some other reason not to do that).

The short version (and the point I am most certain about) is: you can only get one $8000 credit out of the purchase of one house.


The rule I remember is that the buyer and seller cannot be related to each other. I don't remember how closely related counted, but I'm pretty sure the buyer and seller being married counted as related. I'm less sure about engaged (but I assume you're going to file next April as Married Filing Jointly).

In addition to the ethics question, this is also setting aside issues of setting a sale price, your fiance getting a mortgage if necessary, closing costs, etc.

I'm sorry, I misread Darrell's comment. My understanding was that it would not work. But I may have misunderstood the rule, or not remember it correctly (it was not relevant at all to my situation).

Here is a link to the official web site regarding the tax credit for first time home buyers:

You would be better off not even buying a house. Most married people on here can tell you how rough the first couple years of marriage can be. Why put the stress of a mortgage on top of that just for a tax credit.

This is probably not the advice you want to hear, but it is something that you should consider.

If you buy it before you marry, I don't think you have to split up the credit according to your interest in the home. You can split it up however you want. The same applies for any tax deductible interest. If his Modified AGI is above $75,000 (which I don't know if it is but his salary is), then the credit would start to phase out. Therefore, *you* should claim the entire credit to get the highest deduction. The credit is per house, not per buyer, so you would only get one credit. If you get married before you buy, you should be ok if your total income < $150,000.

University of Hard Knocks answer.
Do not purchase a house with a 'fiancee' . period.
Purchase a house with a legal spouse after a year of marriage then you can be better assured of not having a forced liquidation.
You are being sold into a program that doesn't work often.
Divorce or being'stood up' is quite possible.

They only way to get 2 credits is to each purchase your own home. Get officially married (you can still have the ceremony, just not the paperwork) after Jan 1, 2010. You can then each claim the credit on your individual places. Whether that makes sense is up to you, but it is the only way to get 2 credits.

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