My girlfriend and I are buying a house together. I am not eligible for the credit b/c I already own a home. I will be putting the down payment down, but we will be splitting the mortgage. We will both be on the deed, but under tenancy in common. This allows us to provide different ownership percentages, and hers will most likely be under 50%.

Can she claim the entire credit since I am not eligible?

Also, how can we divvy up the mortgage and property tax deductions?

AtlantaTaxExpert

Notice 2009-12, which is linked below:

http://www.irs.gov/pub/irs-drop/n-09-12.pdf

Dupydog

That is the same publication I've been reading. In there, it says I can use any reasonable method to allocate the credit. It defines a reasonable method as "any method that does not allocate any portion of the credit to a taxpayer not eligible to claim that portion". In Example 4, it even says the whole credit can go to one buyer since the other buyer is not eligible for the credit.

So I still have to ask where you're getting that she can only claim $4k?

AtlantaTaxExpert

DupyDog:

If you think an IRS auditor would consider it "reasonable" for your girl friend to claim the entire credit when she only owns, at most, half of the house, then it is apparent who have never had to deal with an IRS auditor.

Go ahead and have her claim the full $8,000 credit. Just do not be surprised when the IRS challenges the credit, disallows it in total due to alleged fraud, then slap her and probably you with a large fine.

Dupydog

I'm not sure I like your tone. There's no need to imply we're trying to fraud the IRS. I was simply asking why you think the answer to my question is $4k, and I see I still haven't gotten a straight answer from you. I'm guessing you think it's $4k b/c that's what you think the fairest method is. Or perhaps you've had experience with similar laws where the IRS said one thing and then changed it later to a more fair ruling. If this is the case, please speak up and give me that evidence.

As for what's reasonable, why would the IRS provide example 4 in notice 2009-12? According to you, person A should only be allowed 1/2 the credit, but the IRS is giving him the entire credit. So I'm not sure why you say the IRS will question what we're doing when they've already provided the basis for doing it that way.

I'm not trying to work around the system. I just want a straight answer on how to do this. I'm no tax expert and I wouldn't be the least bit surprised if I'm interpreting the IRS incorrectly. If something in your experience is telling you that $4k is the right answer, then please explain it to me. Don't jump off the handle and tell me I'm trying to commit fraud.

JudyKayTee

This is a question and answer site - for the very specific information you need to HIRE a professional. "We" provide very broad base information and a direction and then it's up to you.

Our resident expert is not obligated to give you his reasoning and references - you have been furnished with the law and now it's up to you.

Anything specific - HIRE a professional.

Don't mean to be disrespectful but this is #15 in the question and answers on ONE subject and there are all sorts of people waiting for answers out there - and we are all volunteers.

Dupydog

I understand this is a free service where I won't get the most specific information available. That doesn't mean that I should be talked down to or accused of cheating the IRS. And I realize you're providing a free service, but that doesn't mean I don't have the right to question what you have to say.

I appreciate any free advice given and any time taken to give that advice. I would also not be insulted if I was told my case is too specific and that I needed to hire a professional. So I take no offense to your post, Judy.

JudyKayTee

You questions are too specific and you need to hire a professional - and no offense taken.

stevetcg

And yet another shining example of someone not liking the answer they are given and attacking the responder.

OP - go ahead and have your girlfriend file for the full 8k like AtlantaTaxExpert (and thats NOT just a screen name... its accurate) said and let the IRS deal with your fraud. And that IS what it is.

JudyKayTee

Well, but he DID explain his "rights" to us -

stevetcg

They always do... they always do. Funny thing is that most people do not understand what their rights actually are and more importantly, how they apply to the real world.