Today TaxMama hears from Carole in Washington State who tells us. “My brother, a 1st time real estate buyer, is considering the purchase of a property with a garage/shop on it (not a house). Would this purchase qualify for the $8,000.00 1st time buyer tax credit?”
The credit is to help people buy homes – not investment property? They’re on their own for that.
If your brother were to fix up the property so it included a residence – and got an occupancy permit, that part of the property would qualify as a home. So, he could get 10% of the sales price on the residential part of the property as his first time homebuyers credit.
On the other hand, if your brother is any good at running a garage, he’ll generate a lot more money from the income the place produces than the first time homebuyer’s credit. So, I wouldn’t reject the investment just because there is no government incentive.
If he’s got the skills and training in auto mechanics, go for it. People are more apt to be fixing cars these days than buying them. Wish him luck!
And remember, you can find answers to all kinds of questions about buying real estate and other tax issues, free. Where? Where else? At TaxMama.com.[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the subscribe link and join us.]
- Ask TaxMama :: Where taxes are fun and answers are free
- www.TaxQuips.com :: The number ONE free tax podcast online
- IRS FAQs page :: First Time Homebuyers Credit