[housevirgin]

Form 5405 states that you can not claim the first time homebuyer tax credit if you purchase the home from a relative. However, 8a states that a related person includes your spouse, ancestors, (parents, grandparents, etc) or lineal descendents.

I intend to purchase a home from my brother. Based on the definition of "relative" in 8a, I think I would still qualify for the $8000 tax credit. It seems as though the clause is meant to prohibit essentially gifting the home as inheritance and getting $8000 from the government too.

I am uncertain though because form 5405 also says, "For more information about related persons, see Nondeductible Loss in Chapter 2 of Pub. 544, Sales and Other Dispositions of Assets. When determining whether you acquired your main home from a related person,
family members in that discussion (except item 7) include only the people mentioned in 8a above."

Chapter 2 of Pub. 544 includes siblings as relatives, but siblings are not included in 8a of form 5405. Chapter 2 of Pub. 544 actually names "only siblings," and I am not my brother's only sibling... don't know if that makes a difference.

Can someone please advise? Also, can the government change the rule after I've already made the purchase?

[AtlantaTaxExpert]

At face value, it would seem that you could buy from your brother and still qualify for the Credit.

However, to be sure, I would formally query the IRS. You can call at 1-800-829-1040.

[MukatA]

Yes, it appears that for the purpose of home buyer credit, a relative is spouse, parents, grandparents, and linear descendants (children, grandchildren, etc.).
Brother is not a relative for this credit purspose.
Your U.S. Tax Return: First-Time Homebuyer Credit

[sleuth1957]

NO! You canot get the credit from buying the house form a full or half, brother or sister. They are DIRECT LINEAL DECEDENTS to you.Siblings, aunts and uncles aren't mentioned on some of the forms but buyers are referred to IRS Publication 544 for more details. In that publication, close relative is further defined as members of a family, including only brothers, sisters, half-brothers, half-sisters, spouse, ancestors (parents, grandparents, etc.), and lineal descendants (children, grandchildren, etc.).
However, it appears that you can buy a home from an aunt, uncle, niece or nephew and may still qualify for the credit.

[AtlantaTaxExpert]

I disagree. In both links below, lineal and ancestral relations are specifically cited as being prohibited sellors of the home for the purposes of this credit.

First-Time Homebuyer Credit Questions and Answers: Basic Information

First-Time Homebuyer Credit Provides Tax Benefits to 1.4 Million Families to Date, More Claims Expected

A sibling is NOT a lineal or ancestral relation, and I do not believe that IRS Pub 544 applies in this case.

I plan to contact the IRS to get deinitive guidance on this issue.

[sleuth1957]

I called the IRS and after 2 phone trees and 25 minutes of waiting the answer is this:
You CAN take the credit if buying from an Aunt Uncle or Cousin. These people are NOT your direct lineal decedents. You CANNOT get the credit if buying a house from brothers or sisters, half brothers or sisters, parents, grandparents or grandchildren. These people ARE your direct lineal ancestors.

[Bigdaddy614]

It appears to me that you can take this credit. Lineal Descendants DO NOT include siblings. They are considered Collateral Descendants by legal difinition. Pub 544 is a guide for more clarification on family members. However, the new instructions makes it clear after viewing that reference to still only use the family members mentioned on line 9a, which DOES NOT INCLUDE SIBILINGS.

[Bigdaddy614]

It appears to me that you can take this credit. Lineal Descendants DO NOT include siblings. They are considered Collateral Descendants by legal difinition. Pub 544 is a guide for more clarification on family members. However, the new instructions makes it clear after viewing that reference to still only use the family members mentioned on line 9a, which DOES NOT INCLUDE SIBILINGS.

[AtlantaTaxExpert]

The rules have changed somewhat: you CANNOT take the credit if you purchase from aunts and uncles, but you CAN take the credit if the purchase is from a sibling.

[Bigdaddy614]

Thank you AtlantaTaxExpert! That is good news for my sister who could really use the break.

[AtlantaTaxExpert]

Glad to help!

[SphLake]

The rules have changed somewhat: you CANNOT take the credit if you purchase from aunts and uncles, but you CAN take the credit if the purchase is from a sibling.

Atlanta Tax Expert,

My C Corp. owns a rental home ( it is not in my personal name), My son who would be a first time home buyer want to purchase it. Can he do it and get the $8000.00 credit. We do not want to eliminate his status from the Credit if it will not work.

[AtlantaTaxExpert]

Negative.

For purposes of being a related party, the IRS will view the (presumably) closely-held C Corporation as being YOU (the father), thus making the purchase of the home NOT eligible for the $8,000 First Time Home Buyer's Credit.

[NicoleIsCurious]

Well here's a scenario...

My mother & I bought our home from my brother(her son) in April 2009 - both of our names are on the deed/mortgage, I am a first time home owner, she is not.
Am I eligible for the $8,000 tax credit?

[NicoleIsCurious]

The rules have changed somewhat: you CANNOT take the credit if you purchase from aunts and uncles, but you CAN take the credit if the purchase is from a sibling.

Well here's a scenario...

My mother & I bought our home from my brother(her son) in April 2009 - both of our names are on the deed/mortgage, I am a first time home owner, she is not.
Am I eligible for the $8,000 tax credit?:D

& if I am, form 5405 asks "did you buy your home from a relative" I would put no?

[ebaines]

Yes, you are eligible, and per the instructions for form 5405 you check the "no" box. See: http://www.irs.gov/pub/irs-pdf/i5405.pdf

The instructions for line 4 say that you can allocate the $8K credit between unmarried individuals using any "reasonable" method, which they clarify as meaning you should not allocate any of the credut to your mother since she is not allowed to take the credit. Hence - you get the full $8K. One other point - be sure to split the purchase price that you report on line 1 between you and your mother.

[B_Watt]

Bunch of silly's not knowing what you're talking about. Poor, poor people always thinking they know everything yet don't have a clue about a lot if not most things.

YES, you can claim this is bought of a brother or sister. I'm living proof. (now where did I put that 8K, I had it.. it's gone now. That's the real question. :) )