Question: We have heard recently from IRS that we may not qualify for the 1st time Home Buyer’s Tax Credit because of our past ownership. We foreclosed on our home due to business failure in January 2006. Home went to courthouse auction May 2006. New Home was purchased and closed on Aug 25th 2009.
At what point of our Michigan foreclosure process would one be no longer legally be considered a home owner of that foreclosed property? Assuming it would be as of the auction date May 2006 then it would be over 3 years from purchase date of new home. Or is the redemption period included as ownership?
The Question is: Do we legally Qualify for 1st time Home Buyers Tax Credit?
Deborah
Answer: -Yes from what you’ve described, it sounds like you would qualify for the 1st time Home Buyers Tax Credit based on the 3 years of non-homeownership that qualifies a person to receive the tax credit. However, the IRS must be taking into account the redemption period time, which I believe in Michigan is anywhere from 6 months to 1 year depending on the property, after which time you would technically not own the property anymore. There are other “things” that would disqualify you from receiving the 1st time Home Buyer Tax Credit, but if the IRS specifically told you it was because of past ownership, then I can’t think of anything else that would cause your ownership of a home to be less than the 3 years stated. Maybe someone else can shed more light on this…or you can google IRS First-Time Homebuyer Credit Questions…it has a ton of answers there.
Good Luck.