There has been a lot of chatter in Maine lately surrounding first-time homebuying, and legitimately so. The federal government has implemented an $8,000 tax credit to all first-timers who purchase before December 1, 2009, and MaineHousing has upped the ante, offering an additional $5,500 "Gift of Green" for first timers who use their mortgage products - a $5,000 grant at closing plus a $500 certificate toward an energy audit. Spend some of that money on energy improvements, and you can rack up another $1500 tax credit come April, bringing the grand total to a whopping $15,000 to buy a home in Maine this year.
Yesterday I was asked by an acquaintance who had never bought a home whether she would qualify as a first time homebuyer, and the answer wasn't quite clear. Her situation: Her husband owned a home, which he had purchased before they got married. She wasn't on the deed or the note for the home. The were thinking about making a move, and she wondered if she could qualify for some of the programs out there. The answer was yes and no.
In Maine, she would qualify for the Gift of Green program (and a MaineHousing mortgage) IF she purchased the new home on her own and didn't need any of her husband's income to qualify.
However, she woudn't qualify for the $8,000 tax credit, even though she had never bought a home before. According to the IRS's explanation below, her marriage to a homeowner would disqualify her for the program, even if she was on neither the note nor the mortgage, and she and her husband filed taxes separately.
From the IRS website:
S4. If husband and wife wanted to sell the home that the wife owned when they got married, and the husband had not owned a home within the past three years, could he qualify as a first-time homebuyer for the credit even though the wife would not qualify?
A. No. The purchase date determines whether a taxpayer is a first-time homebuyer. Since the wife had ownership interest in a principal residence within the prior three years, neither taxpayer may take the first-time homebuyer credit. Section 36(c)(1) of the Internal Revenue Code requires that the taxpayer and the taxpayer's spouse not have an ownership interest in a principal residence within the prior three years from the date of purchase. The husband may not take the credit even if he filed on a separate return.
A lot of states are implementing new first-time homebuyer incentive programs to piggyback on the $8,000 federal tax credit, so it's important to check in with a local lender and accountant to see what your particular situation would be.
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