Today TaxMama hears from Larry in Texas with an interesting question. “My son and his wife purchased a manufactured home this year that is located on land in my name.
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Would they qualify as a ‘’first-time home buyer’’ in the 2009 program?”
Dear Larry,
That’s an interesting question.
Since the land is yours, they cannot use any part of the cost of the land towards the credit. You may not use the credit for purchases from family. That was specifically excluded.
Exclusion – You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild. https://www.irs.gov/newsroom/article/0,,id=206291,00.html
However, I’ll bet they didn’t buy the home from you. They bought it new from the manufacturer, or used from a dealer or someone else.
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The cost of the home and the foundation, set-up and delivery ought to qualify for the first time homebuyer’s credit.
Here’s another tip. The credit is limited to 10% of the cost up to $8,000. So, if the home cost much more than that, they may also be able to take the new sales tax deduction on their 2009 tax return.
Of course, they can use the first time homebuyer’s credit on their 2008 original or amended return – or wait until they file their 2009 tax return.
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Use Form 5405 https://www.irs.gov/pub/irs-pdf/f5405.pdf to report the credit.
And remember, you can find answers to all kinds of questions about the first time homebuyer’s credit and other tax issues, free.
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Where? Where else? At TaxMama.com
- Ask TaxMama :: Where taxes are fun and answers are free
- www.TaxQuips.com :: The number ONE free tax podcast online
- IRS FAQs :: First Time Homebuyer Credit
- IRS Form 5405 :: First-Time Homebuyer Credit Form
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