Hi

I have claimed home loan interest in my 2008 tax returns for a home in India not in USA. Now i am planing to buy a home in USA . I never owned a home in USA . Now my question is Am I Qualify for 'First Time Home Buyer Tax Credit' and FHA Loan. My accountant says that , I am qualify because i dont own a home in USA so far . Can you please give me your inputs on this .

Thanks
msraokvt

AtlantaTaxExpert

The ownership of a home in a foreign country is NOT addressed by any of the IRS releases on this subject, so I will tentatively agree with your accountant.

However, a phone call to the IRS International Tax Hotline will be made addressing this issue. If I get different guidance, I will post it tomorrow.

msraokvt

AtlantaTaxExpert thank you for your input. I would appriciate if you can check for both the FHA loan and First time home owner tax credit . Thanks in advance . msraokvt

MukatA

I think mosraokvt is not eligible for the credit. He does not meet the requirements of being the first time homebuyer who did not own house in last three years.

AtlantaTaxExpert

MukatA is correct.

I contacted the IRS International Tax Hotline who researched the issue and provided this guidance:

The criteria for previous home ownership is NOT restricted to the United States. If a resident alien owns a home, condominium or apartment ANYWHERE in the world that served as their MAIN home within three years of the purchase date, they are NOT ELIGIBLE for the First Time Home Buyer's Credit.

If you purchase a home in the U.S. and knowingly claim the First Time Home Buyer's Credit while having already purchased and owned a home in your home country, you are committing tax fraud!

While it may be difficult for the IRS to track home ownershp in foreign countries, it is NOT impossible! If you claim the credit and get caught, not only are you subjecting yourself to some hellacious fines and penalties, you are committing a crime which could result in your visa being revoked.

msraokvt

Hi Guys, Thank for your input. I saw one news in CNN.com Here is the link http://money.cnn.com/2009/09/24/pf/expert/home_buyer_credit.moneymag/index.htm . It says not owning a 'Primary Home' in last three years. The home in india is not my main home. I dont live there i live in USA. Main home means where i live know . For tax purpose we van claim the interest for the main home and/or secondary home loan interest. I think mian home means where i live is the primary/main home. I have been living in USA from past 11 years full time by renting the home. Please give me your inputs on this.

Thanks
msraokvt

msraokvt

In the IRS website the requirement for the first time home buyer tax credit as follows .
You may be able to claim the credit if:

You purchased your main home in the United States after April 8, 2008, and before December 1, 2009, and
You (and your spouse if married) did not own any other main home during the 3-year period ending on the date of purchase.

the link : First-Time Homebuyer Credit.


I have purchased my main home in USA in 2009 and I did not owned main home in last 3 years . From the IRS pub 523 the main home is defined as 'your main home is the one in which you live most of the time.'

From the above facts i think i am eligible for the first time home buyer tax credit. Please let me know your thoughts on this .

Thanks
msraokvt

AtlantaTaxExpert

Msraokvt:

If you converted your home in India to a rental property, charged rent and claimed that rental income on your tax return using Schedule E, and you did this for at least 36 consecutive months prior to your U.S. home purchase, then (and only then) you can make the argument that the home in India is NOT your primary home.

So now the big question is this: Did you claim the rent you received on the Indian home on your U.S. tax return?

If so, then I agree that you can claim the First Time Home Buyer's Credit.

If not, then you have NO PROOF that the home in India is NOT your primary home (always remember that, when it comes to taxes, the burden of proof rests with the taxpayer).

Also remember that the IRS is looking at all applications for this credit VERY CAREFULLY due to the potential for fraud. If they determine that you owned a home in India, the rent from which you never declared on your U.S. tax return, they would not only disallow the credit, but would then go back eleven years and demand that you declare the rental income on the Indian home you rented.

I just got down amending seven years' worth of returns for an Indian couple who failed to properly report overseas rental income. It turns out they owed NO additional taxes, but it was an expensive process for them to correct their tax records to report the rental income. You need to consider whether $8,000 is worth the hassle of amending 13 years' worth of returns.

msraokvt

Thank you for your input. My home in india is not yet completed and i dont get any rentals. I have started last year october and expected to complete in india. I have claimed the home loan interest only last year. So far i have any rental income.

I am still looking for a home here and i am not sure if i can close the escro before the dead line Dec 1st . I will consider your input if at all i buy a home .
Thank you .
msraokvt

msraokvt

Thank you for your input. My home in india is not yet completed and i dont get any rentals. I have started last year october and expected to complete end of this year . I have claimed the home loan interest only last year. So far i dont have any rental income.

I am still looking for a home here and i am not sure if i can close the escro before the dead line Dec 1st . I will consider your input if at all i buy a home .
Thank you .