Today, Todd Clark, a great REALTOR from Beaverton/Tigard, OR asked the following straight forward question on ActiveRAIN":
If two roommates buy a home together, and both are first time home buyers, can they both get the tax credit of $8,000?
The short answer to Todd's question is:
No!
Here is the long answer:
On line one of Federal Form 5405 you report the smaller of $8000 or 10% of the value of your home. This determines the maximum amount of your credit. It tells you to only enter $4000 if your are married filing separately.
Then at the end of the on-form instructions for Line 1 it says:
If someone other than a spouse also held an interest in the home, enter only your share of this amount (see instructions).
The instructions for the form say:
Line 1. If two or more unmarried individuals buy a main
home, they can allocate the credit among the individual
owners using any reasonable method. The total amount
allocated cannot exceed the smaller of $7,500 ($8,000 if
you purchased your home in 2009) or 10% of the
purchase price. See Purchase price on page 3.
Part II Credit
Note. A reasonable method is any method that does not
allocate all or a part of the credit to a co-owner who is
not eligible to claim that part of the credit
So, if you are single and own half, you report half. If you own some other fraction, you calculate and report the resulting portion of the $8000.
The bottom line is:
One home = One credit.
The IRS didn't have much time to react to this credit last winter. But they did manage to get it right.
***********************
Jim Hale
Principal Broker / Owner
Graduate, REALTOR Institute e-PRO
2012 Member, Million Dollar Club of Lane County
2012 Member, Real Estate Brokers Million Dollar Club
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Eugene, OR 97401-1962
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