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Our existing home is about to (finally) close and I have a question regarding my family's eligibility for the soon-to-expire tax credit. We bought our current home in March 2005 and will be closing, as I mentioned, in March 2010. However, due to relocation, we have not actually been occupying the home since last summer but have instead been renting. Given that this is the only residence we've owned for the past five years, is it likely that we would qualify for the $6500 credit if we are able to meet the April deadline for a purchase?
As 2bindenver suggest, it is best to consult with a CPA. I did find this though:
-- Evidence of long-term ownership and occupancy of the previous house to meet the five-consecutive-years requirement. This can be property tax records, homeowner's insurance records or IRS Form 1098 mortgage interest statements for the five-year period.
I agree you need to consult with a professional.
Whether or not this will help you:
What is the definition of a move-up or repeat home buyer? The law defines a tax credit qualified move-up home buyer (“long-time resident”) as a person who has owned and resided in the same home for at least five consecutive years of the eight years prior to the purchase date. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.
"The Internal Revenue Service (IRS) has now published the new Form 5405, First-Time Homebuyer Credit and Repayment of the Credit, with instructions on its Web site, and the IRS wants more information from home purchasers than was requested last year. Taxpayers must check a box to indicate that they did not purchase the home from a related person, they must enter the purchase price of the new home, and, in the case of first-time homebuyers, confirm that they have not owned a home for three years.Long-term homeowners now eligible for a reduced credit for the purchase of a new home through April 10, 2010 must provide documentation that they have lived in their previous residence for five consecutive years of the last eight years. All claimants for the credit must document their purchase. Paper returns will be required for claiming the credit because of the added documentation."
However, you would have no problems excluding the gain on the sale of the home, either $250,000 or $500,000 depending on your marital status. Since you lived in the home at least two of the past five years.
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