First Time Homebuyer Tax Credit Scenario

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Posted by jimi on November 02, 2009 at 08:51:05:

Mr. Ex purchases a house in 2002 as a primary residence.
He marries in 2007. Mrs. Ex moves in.
Mr and Mrs Ex divorce in 2009.
Her name was never on the deed.

Now the former Mrs. Ex is looking to buy one of our properties.
She believes that she qualifies for the first-time homebuyer tax credit since she has never "owned" a property.
I'd like her to be correct, but in Form 5405, in the "Who qualifies for the Credit" section, is her biggest hurdle:

"You (and your spouse if married) did not own any other
main home during the 3-year period ending on the date of
purchase."

Well, technically .... she AND her spouse did not own. Only her spouse owned.
It does not read, "You and/OR your spouse" did not own! Ha!

Pretty slim case huh?
I'm also guessing that there may be marital rights that infused some type of "ownership" to her in this asset?

She's taking the view that if it's not specifically excluded, then it's allowed.
As currently structured, I've got a 2nd trust balloon note tied to the proceeds of the tax credit ... so it's not just her risk. Right now, I'm leaning against it, but I do like her moxy. What do you think?


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