"Loophole" in the federal home tax credit

[xeemzor]

I was reading the Federal Housing Tax Credit guidelines and it seems to me that you could sell your house to your kid who is 18+ and receive the tax credit. As of now the tax credit is $8k but could raise to $15k. I'm not sure what the tax implications are, but I do know for sure you can gift around ~12k/person/year tax free. That $12k is more than enough to cover insurance, taxes, and bills for your kid. After the 3 year takeback provision has been cleared, you can just "buy" your house back from your kids. Seems perfect for kids moving to college and still need a primary residence.

Also, it seems to me that if you have a multiple family dwelling you could sell one dwelling to each of your kids. Sell to 2 of your kids for a net of $30k

Am I wrong with this? Sure it's a lot of work, but you could possibly get $15k per kid up to the number of dwellings available.

 

[mugs]

I thought the tax credit excluded sales between family members?

Even if it didn't, there are all kinds of expenses related to selling a property. In addition, if your child is in college he/she probably won't get much out of deducting property tax and mortgage interest.

 

[xeemzor]

Originally posted by: mugs
I thought the tax credit excluded sales between family members?

Even if it didn't, there are all kinds of expenses related to selling a property. In addition, if your child is in college he/she probably won't get much out of deducting property tax and mortgage interest.

Nothing about that is in the FAQ on the webstie, but that doesn't mean it's not in the bill. The only thing listed is a "new home owner."

 

[waffleironhead]

So how do you intend for the kid to receive financing for this purchase? or is this for the small percentage of people who own their home outright?

 

[Bignate603]

Originally posted by: waffleironhead
So how do you intend for the kid to receive financing for this purchase? or is this for the small percentage of people who own their home outright?

Cosign on the mortgage maybe.

 

[r6ashih]

seller financing?

 

[newnameman]

http://www.irs.gov/newsroom/ar...e/0,,id=206291,00.html

Q. Who cannot take the credit?

A. If any of the following describe you, you cannot take the credit, even if you buy a new home:

Your income exceeds the phase-out range. This means joint filers with MAGI of $170,000 and above and other taxpayers with MAGI of $95,000 and above.

You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild.

You do not use the home as your principal residence.

You sell your home before the end of the year.

You are a nonresident alien.

You are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year. (This does not apply for a home purchased in 2009.)

Your home financing comes from tax-exempt mortgage revenue bonds. (This does not apply for a home purchased in 2009.)

You owned a principal residence at any time during the three years prior to the date of purchase of your new home. For example, if you bought a home on July 1, 2008, you cannot take the credit for that home if you owned, or had an ownership interest in, another principal residence at any time from July 2, 2005, through July 1, 2008.

 

[xeemzor]

Originally posted by: newnameman
http://www.irs.gov/newsroom/ar...e/0,,id=206291,00.html

Q. Who cannot take the credit?

A. If any of the following describe you, you cannot take the credit, even if you buy a new home:

Your income exceeds the phase-out range. This means joint filers with MAGI of $170,000 and above and other taxpayers with MAGI of $95,000 and above.

You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild.

You do not use the home as your principal residence.

You sell your home before the end of the year.

You are a nonresident alien.

You are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year. (This does not apply for a home purchased in 2009.)

Your home financing comes from tax-exempt mortgage revenue bonds. (This does not apply for a home purchased in 2009.)

You owned a principal residence at any time during the three years prior to the date of purchase of your new home. For example, if you bought a home on July 1, 2008, you cannot take the credit for that home if you owned, or had an ownership interest in, another principal residence at any time from July 2, 2005, through July 1, 2008.

Ah, it was on another website. Thanks for the clarification.