First Time Home Buyer Credit if You Own a Home Outside of the USA

[kaschool]

HI There, you are in a very similar situation to me. I own a home in England and purchased my first home in the UNited States last year. We have waited 12 months for the tax credit as we were advised by a number of people including the IRS website that Yes we would be allowed because owning a home in another country does not exclude you. basically it is not counted.

ANyway, just got a letter from the IRS denying the claim, stating that we had owned a home in the previous 3 years!

I do believe this is a mistake on their part. The IRC section 36 law does not seem to specify any details about owning a principle residence in another country, except for one very important area:

CODE SEC. 36. FIRST-TIME HOMEBUYER CREDIT.
36(a) ALLOWANCE OF CREDIT. --
In the case of an individual who is a first-time homebuyer of a principal residence in the United States
during a taxable year, there shall be allowed as a credit against the tax imposed by this subtitle for such
taxable year an amount equal to 10 percent of the purchase price of the residence.


I am not a law professional but it would seem that the above, implicitly implies that the owning a principle residence in another country is not relevant because they are only concerned with your first time purchase in the UNited States.

PLease can anyone with experience within this code comment?

thanks

rich

[flyingron]

You're misreading the statute I believe:

(c) Definitions. For purposes of this section--
(1) First-time homebuyer. The term "first-time homebuyer" means any individual if such individual (and if married, such individual's spouse) had no present ownership interest in a principal residence during the 3-year period ending on the date of the purchase of the principal residence to which this section applies.
(2) Principal residence. The term "principal residence" has the same meaning as when used in section 121 [IRC Sec. 121]

So, you only get the credit if you buy a principal residence in the US and you have not had an ownership interest in your principal residence ANYWHERE.

[Bubba Jimmy]

That is correct, the law does not state any relevant location of any prior principle residence. The code section quoted relates to the amount of the credit, which is 10% of the purchase price up to the maximum credit amount. The credit is only claimable if you purchased a residence in the United States. There are no geographic conditions on the prior ownership language.