Q: I am aware that nonresident aliens are not eligible for the $8,000 first time home buyer tax credit.
I am a resident alien (green card holder) but do not have enough cash or the possibility of qualifying for a mortgage. My friend who lives abroad (a nonresident alien) has suggested we buy a home together for cash so I can take advantage of the tax credit. The property would be jointly owned and it would be my primary residence but my friend will not live there, it will just be an investment for him.
I assume that to take advantage of the tax credit my name has to be on the title but do we need to specify what share each one has. And would I qualify for the $8,000 first time home buyer tax credit only on my share? Would I qualify for the entire $8,000 first time home buyer tax credit or a lesser amount?
A: The good news is that you should be entitled to get the first time home buyer tax credit of $8,000 for your home purchase. While your friend would not qualify and could not get the tax credit, you do qualify for the credit.
To qualify for the first time home buyer tax credit, you can’t be a nonresident alien. That is to say you must be legally in the United States with the right to reside here. So if you were a tourist coming for a visit, you would not qualify for the tax credit. You would also not qualify for the tax credit if you were undocumented and living in the United States illegally. You also must not have not owned a home during the last three years and your modified adjusted gross income must be less than $75,000 per year.
In your circumstances, your friend could be treated as a parent or other person that was assisting you in your purchase of the home. But your purchase of the home must be for your personal use and it must become your personal and primary residence and must continue to be your primary residence for 36 months following your purchase.
One additional important item for you: the home you buy must be located in the United States. You won’t qualify for the $8,000 first time home buyer tax credit on home purchases outside of the United States.
The IRS gives several good examples on their website that would help prospective home buyers in their quest to buy a home this fall before the first time home buyer tax credit ends at the end of the day on November 30, 2009. For more information, go to www.IRS.gov for details.
To recap, if you are a nonresident alien, you can’t get the benefit of the first time home buyer tax credit, but if you are a resident alien, you should be able to get the benefit of the first time home buyer tax credit. But you’ll need to move fast in case they don’t extend the tax credit and the November 30, 2009 deadline passes.