@IOBA wrote:Then you qualify for the first time buyer credit.
You should becuase the house loan is in YOUR name.
If unsure, you can always call the IRS and ask them if you qualify for that credit since it IS your first home and the mortgage is ONLY in your name. When you file taxes, make sure your name appears first on the forms.
Sorry, I'm afraid they don't. Here is the response from my tax guy when I asked the same question and a link to an IRS article clarifying the rule.
I’m afraid not (sorry). Either spouse’s history destroys the credit for the other. Here is a discussion from the IRS website and a link to it as well (http://www.irs.gov/newsroom/article/0,,id=206293,00.html):
Q. I am a long-time resident and current homeowner and my spouse is a first-time homebuyer (has had no ownership interest in a principal residence during the three-year period ending on the date of purchase of a new principal residence) and we purchased a new principal residence. Can we qualify for either the first-time homebuyer credit or the long-time resident homebuyer credit if we purchase a new principal residence?
A. No. Both you and your spouse must be first-time homebuyers in order to qualify for the first-time homebuyer tax credit. Since you had an ownership interest in a principal residence during the three-year period ending on the date of purchase, neither you nor your spouse qualifies for the credit. Similarly, both you and your spouse must be long-time homeowners of the same previous principal residence in order to qualify for the long-time resident homebuyer credit. Since your spouse is not a long-time homeowner of your current principal residence, neither of you qualify for the credit. (12/14/09)
When I filed that year, the IRS had not yet published the clarification articles, and I like many others claimed the credit. My tax guy acted in good faith in putting me in for it, but I ended up with a rejected return when the IRS denied the credit. For something this big, you should really do your homework. Pay a couple hundred to an expert and show them these articles... Find out if there is a way around it. Who knows, maybe if you file seperate you can slip it by, but in a few years when you're audited you'll owe the IRS a staggering amount.
I feel your pain - We lost that, plus an 8k state credit that we would have got because the house we purchased was a new home, except the guy that short sold it claimed to have lived in it for the tax protections, even though he couldn't possibly have - it was not finished! So we lost out on that credit too. Makes me sick to my stomach just thinking about it.