New Homeowner's Tax Credit

[Powertrain]

Hello, just wondering if anyone has any input on the $7500 First-Time Homebuyer Credit that you can claim on your US taxes.

One of the conditions for being able to apply for this credit is that you have not owned a house in the past 3 years before purchasing your current home between April 8, 2008, and before July 1, 2009. My wife (a US citizen) and I (working on an L1, and my green card is in the works) had a house built for us in the USA and took possesion this past June, selling our Canadian residence in 2007. Prior to that we owned a house in Canada and lived there, while I commuted across the border for work.

What I am wondering is, does the Canadian house count as a 'house in the past 3 years', or are we still eligible for the credit? I spoke with a friend that works for H&R Block, and they think I can still apply since I have never claimed any mortgage interest deductions and property tax credits on my US taxes while we lived in Canada.

[Steven]

It probably doesn't count as a house because the IRS won't be aware of it, from the sounds of it you're a US resident taxpayer (certainly your wife must be) so if she's filed 1040s for the last three years and the house is in her name (or alternatively, you file jointly and it's in either one of your names), I can't see there being a problem.

The purpose of the credit is obviously to stimulate the US housing market so I can't see why they would care if you ever owned a house outside the US.

I think the guy from H+R block is probably right, you never claimed any deductions even if you were filing 1040s when you lived in Canada. So the IRS won't be aware of the house you had in Canada and I can't see why they would care even if they did know, because it wasn't in the US.

[agnelson]

The criteria for the credit is not having owned one's principal residence in the past three years. There is no mention of whether or not one claimed any deduction or credit on previous returns, nor if one even filed a US tax return.

Thus, even if you moved from canada recently, if you owned your principal residence it the three years prior to purchasing this one, you are ineligible for the credit.

H&R blockheads are notoriously wrong on all cross-border issues.

[Steven]

I saw on the news last night that Congress is urging the IRS to audit these claims. There has been massive fraud.

[Reba]

imagine that...

[SueParker]

Wouldn't the tax credit be essentially worthless though, as it would just reduce your foreign tax credit and you'll have to pay more Canadian taxes? I suppose it would work for US tax-residents though...

[agnelson]

Of course. We are talkinga bout US taxpayers here. Most people who move to the US and buy a home there have become US tax residents.