Tax Credit: Do qualifying sellers need to sell current home to get the credit? (price, renting)

[Brandon Hoffman]

I have a couple that will be purchasing a new home that meet income and price qualifications for the tax credit. They are considering renting their home or selling it. Can they rent their current home, buy a new one as their primary residence, and get the credit?

[chet everett]

The credit is for BUYERS and the new rules, while allegedly addresses some of the murky areas, still seem vague on what qualifies as a "primary residence replacement" -- Home Buyer Tax Credit: 10 Things to Know at SmartMoney.com

My gut says IRS will only go after the most flagrant abusers, but then again I could not represent your buyers in Tax Court so maybe they ought to ask someone who can

[rjrcm]

Originally Posted by Brandon Hoffman

I have a couple that will be purchasing a new home that meet income and price qualifications for the tax credit. They are considering renting their home or selling it. Can they rent their current home, buy a new one as their primary residence, and get the credit?

As long as they meet all the other qualifications (5yrs in current home out of last 8, income limitations, etc) I think they can. The expanded tax credit act only says they have to be acquiring a subsequent primary residence and does not say they have to sell the previous. However, they should check with the IRS when their guidelines come out sometime this month.

[Silverfall]

I asked my CPA that question and she said yes it appears that they don't have to sell their old house to buy a new primary residence, but said it is a bit murky right now.