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Tax Court Rules on Homebuyer Credit When Former Residence Is Being Sold - Emil Estafanous, CPA : Emil Estafanous, CPA

Tax Court Rules on Homebuyer Credit When Former Residence Is Being Sold

The Tax Court reason that a married couple’s aged house, that they continued to use while perplexing to sell it, competent as a principal residence, and therefore they did not accommodate a timing requirement to validate for an $8,000 first-time homebuyer credit when they purchased a new chateau (Foster,  138 T.C. No. 4 (2012)).

The Fosters put their former chateau on a marketplace in Feb 2006, and they began spending many of their time during Mrs. Foster’s parents’ house. The sale of a aged chateau was finalized on Jun 6, 2007. They purchased a new chateau on Jul 28, 2009.

The Fosters claimed an $8,000 first-time homebuyer credit on their 2008 taxation return, that a IRS denied.

Under Sec. 36(c), a “first-time homebuyer” was tangible as any particular who had had no benefaction tenure seductiveness in a principal chateau for 3 years before to a date of squeeze of a principal chateau for that a credit was being claimed. For a Fosters to validate for a credit, a aged chateau could not have been deliberate their principal chateau after Jul 27, 2006.

The Fosters argued that they stopped regulating their former chateau as a principal chateau in Feb 2006, and therefore met a three-year period.

The Tax Court looked during all of a contribution and resources to interpretation that a aged chateau remained a Fosters’ principal chateau after Jul 27, 2006. The justice remarkable that they did not compensate lease or utilities during Mrs. Foster’s parents’ house. Also, a Fosters continued to use their aged chateau for certain purposes: on their 2005 taxation earnings (filed in Oct 2006), on Mrs. Foster’s driver’s permit renovation in Apr 2006, and on a let focus in Apr 2007.

Furthermore, while a aged chateau was on a market, they kept it furnished, frequently stayed there overnight, hosted family gatherings in a house, and kept personal belongings, accessed a Internet, and perceived bills and association there.

These contribution led a justice to reason that a aged chateau remained a Fosters’ principal chateau after Jul 27, 2006, and therefore a compulsory 3 years had not elapsed before to their squeeze of a new house. The justice reason that they were so not entitled to explain a first-time homebuyer credit.

About Emil Estafanous, CPA
Certified Public Accountant (CPA) Tax Professional committed in representing taxpayers and resolving their tax problems.

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