Total Records AvailableForeclosure Articles
Credit for Multiple Units?
QUESTION: Are multi-family homes - say a duplex, triplex or quad - allowed under the first-time homebuyer tax credit if the buyer lives in one unit? I have only seen the term "main household" in my search for an answer.
ANSWER: Good news - the government says you may qualify for a write-off. The IRS offers this example:
Q. I purchased a duplex home with two separate dwelling units. I will live in one dwelling and will rent out the other dwelling unit and report the rental income on Schedule E. May I qualify for the first-time homebuyer credit, and what amount do I use for the purchase price to determine the amount of the credit?
A: Yes, you may qualify for the credit for the dwelling unit that you use as your principal residence. To determine the amount of your credit, you must allocate the purchase price of the duplex between the two separate dwelling units. Your credit is 10% of the portion of the purchase price of the duplex allocated to your dwelling unit that you use as your principal residence, up to a maximum credit of $8,000. You may not use the entire purchase price of the duplex to determine the amount of your credit.
You are smart to ask this question. Here's why: A large number of people taking the first-time homebuyer tax credit do not qualify. An estimated 1.4 million people have applied for the credit, but according to the Treasury Dept. almost 74,000 have owned a home during the past three years, making them ineligible.
The IRS has two useful items online to help with the first-time homebuyer credit. First, get a copy of IRS Form 5405 to see if you qualify. Second, search online for the IRS document, "First-Time Homebuyer Credit Questions and Answers: Basic Information."
Peter G. Miller is the author of The Common-Sense Mortgage and a veteran real estate columnist. Have a question? Please write to firstname.lastname@example.org.View Foreclosure Article Archives
All content copyright © 1997 -
2017 by Record Information Services, Inc.
This Page Powered by: Record Information Services