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Will Owning a Home in Italy Affect the First Time Home Buyers $8000 Credit

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  • 05-23-2009, 11:54 AM
    artnbarb
    Will Owning a Home in Italy Affect the First Time Home Buyers $8000 Credit
    We currently own a home in Italy. We have a mortgage for this house with a German bank who has offices in Italy. we deduct the interest every year on our taxes.

    Our mailing address is that of a relative, where we live when we are in the states.

    We are now selling our house in Italy and wonder if we will qualify for the first time home buyers tax credit since it's been over 6 years since we owned a home in the U.S. Will we need to list our house in Italy as simply a vacation home, or is it more complicated than that? I went to the website http://www.federalhousingtaxcredit.com/2009/index.html and did read that owning a second/vacation home did not disqualify someone from this program.

    What else do I need to know?
  • 05-23-2009, 04:31 PM
    llworking
    Re: Will Owning a Home in Italy Affect the First Time Home Buyers $8000 Credit
    Quote:

    Quoting artnbarb
    View Post
    We currently own a home in Italy. We have a mortgage for this house with a German bank who has offices in Italy. we deduct the interest every year on our taxes.

    Our mailing address is that of a relative, where we live when we are in the states.

    We are now selling our house in Italy and wonder if we will qualify for the first time home buyers tax credit since it's been over 6 years since we owned a home in the U.S. Will we need to list our house in Italy as simply a vacation home, or is it more complicated than that? I went to the website http://www.federalhousingtaxcredit.com/2009/index.html and did read that owning a second/vacation home did not disqualify someone from this program.

    What else do I need to know?

    In my opinion, that would disqualify you.
  • 05-24-2009, 06:54 PM
    artnbarb
    Re: Will Owning a Home in Italy Affect the First Time Home Buyers $8000 Credit
    What led you to that conclusion? As I read the requirements, having a secon/vacation home did NOT disqualify a person from taking the credit - or have I missed something???
  • 05-24-2009, 07:08 PM
    jk
    Re: Will Owning a Home in Italy Affect the First Time Home Buyers $8000 Credit
    How would your respond to this question:

    have you owned a principal residence in the last 3 years?
  • 05-24-2009, 08:32 PM
    Bubba Jimmy
    Re: Will Owning a Home in Italy Affect the First Time Home Buyers $8000 Credit
    There isn't a statutory definiton of "principle residence". However, if a person lives in two places during the year, the IRS will consider the place where the person lives more of the time to be the place of principle residence. What portion of the year did you live in your house in Italy?
  • 05-24-2009, 09:14 PM
    jk
    Re: Will Owning a Home in Italy Affect the First Time Home Buyers $8000 Credit
    Quote:

    Quoting Bubba Jimmy
    View Post
    There isn't a statutory definiton of "principle residence". However, if a person lives in two places during the year, the IRS will consider the place where the person lives more of the time to be the place of principle residence. What portion of the year did you live in your house in Italy?

    actually, the link provided does give additional info as to if a home is considered a primary residence.

    to start, this is from the links FAQ's:

    Quote:

    The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase.
    this is the section the OP wants to claim so they are eligible:

    Quote:

    Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.
    so they go on to state this:

    Quote:

    The definition of principal residence is identical to the one used to determine whether you may qualify for the $250,000 / $500,000 capital gain tax exclusion for principal residences.
    if you start chasing that info, you will come up with this:

    Quote:

    Factors used to determine main home. In addition to the amount of time you live in each home, other factors are relevant in determining which home is your main home. Those factors include the following.
    Your place of employment.

    The location of your family members' main home.

    Your mailing address for bills and correspondence.

    The address listed on your:

    Federal and state tax returns,

    Driver's license,

    Car registration, and

    Voter registration card.

    The location of the banks you use.

    The location of recreational clubs and religious organizations of which you are a member.
    since the OP lists their location as Umbria. Italy, I would take it that that is their main home.

    that and the fact they USE a relatives US address when they are in this country shows they do not have a consistent address here.

    The home in Italy is their principal residence.


    it is simple the OP is attempting to claim the tax credit and is likely not eligible. They got one opinion and wanted to argue with that opinion so my suggestion is they apply the credit on their tax filing and let the IRS do their thing.

    From what I have read, they are not eligible but I am not the IRS.
  • 05-25-2009, 09:35 AM
    Bubba Jimmy
    Re: Will Owning a Home in Italy Affect the First Time Home Buyers $8000 Credit
    Sorry, but that link is to the National Association of Home Builders. Again, there is no statutory definition of "principal residence". If you believe there is, please post the statute. I will then admit my error.

    Quote:

    The definition of principal residence is identical to the one used to determine whether you may qualify for the $250,000 / $500,000 capital gain tax exclusion for principal residences.
    This is true only because the section of the tax code dealing with the capital gain exclusion also uses the term "principal residence" without a statutory definition.

    The IRS issued guidance in 2002 to help taxpayers determine their principal residence. This guidance can be reviewed at http://www.irs.gov/newsroom/article/...105042,00.html.

    Quote:

    For taxpayers with multiple homes, the regulations list several factors relevant to determining which home is the principal residence. Among these are amount of time used; place of employment; where other family members live; the address used for tax returns, driver’s license, car and voter registration, bills and correspondence; and the location of the taxpayer’s banks, religious organizations or recreational clubs.

    I consider the IRS to be an authoritative source for this kind of information. There are a number of complex factors that are taken into consideration in determining principal residence. In my experience, the amount of time lived in a residence is the most important factor but certainly not the only one. The individual's present location is not of much relevance.
  • 05-25-2009, 11:04 AM
    jk
    Re: Will Owning a Home in Italy Affect the First Time Home Buyers $8000 Credit
    I said it was statutory? No.

    I said the info I posted in regards to actually making the decision was from the link the OP provided? no.


    if you will look, you posted essentially the same items used for a determination as I have.


    Oh, and to this:

    Quote:

    The individual's present location is not of much relevance
    So, if the OP lives in the house it Italy and visits here and uses a relatives address for correspondance while here, it is irrelevant? Oh, ok, if you say so.
  • 05-25-2009, 01:27 PM
    Bubba Jimmy
    Re: Will Owning a Home in Italy Affect the First Time Home Buyers $8000 Credit
    You said:
    Quote:

    since the OP lists their location as Umbria. Italy, I would take it that that is their main home.
    I simply pointed out that this is an erroneous assumption. Yes, the link I provided gave similar information to that provided at the website of the builder's association. One difference, my link was to the IRS, and it provided the poster with the ability to make their own determination as to where their principal residence was from an authoritative source.

    Living in Italy is not irrelevant. However, in the vast majority of cases the IRS will determine exactly as I indicated, by the location where the person spent more of their time. The other factors would have to be very strong to make an effective case for a home where less than half the time was spent.
  • 05-25-2009, 03:27 PM
    jk
    Re: Will Owning a Home in Italy Affect the First Time Home Buyers $8000 Credit
    well, just for your benefit, mine was also from the IRS. Happy now? It was simply a less formal statement of the concerns used to interpret the rule.


    Quote:

    The other factors would have to be very strong to make an effective case for a home where less than half the time was spent
    .and this is an assumption by you that the OP doesn't live in Italy more than 1/2 time.
  • 05-25-2009, 06:50 PM
    Bubba Jimmy
    Re: Will Owning a Home in Italy Affect the First Time Home Buyers $8000 Credit
    Oh good grief, this is getting so ridiculous. I have no idea where this person spends their time. If you posted a link to the IRS I missed it. Sorry 'bout that. I like to provide such links so I'm not just some anonymous person on some anonymous board claiming that I know everything. An authoritative source lets a person see for themselves what the rules are. That is better than asking people who don't know me to take the word of someone they can't check out.

    I hope the purpose here is to help people and help point them to information, not just inflate our own egos trying to convince everyone how much we know. As bent out of shape as people get, I do have to wonder. As for me, I'll always provide an authoritative source for any advice on answers I give so it isn't just me saying so. I've represented a large number of people before the IRS on every topic imaginable, but there's no way anyone here would have any way to verify that so nothing substitutes for authoritative sources if someone is going to actually make a decision based on the things said here.

    I certainly don't want the responsibility of steering someone wrong, and then excusing it with a flippant "well, advice is worth what you pay for it". If I can't help someone, I'd rather remain silent.
  • 05-25-2009, 08:58 PM
    llworking
    Re: Will Owning a Home in Italy Affect the First Time Home Buyers $8000 Credit
    Quote:

    Quoting Bubba Jimmy
    View Post
    Oh good grief, this is getting so ridiculous. I have no idea where this person spends their time. If you posted a link to the IRS I missed it. Sorry 'bout that. I like to provide such links so I'm not just some anonymous person on some anonymous board claiming that I know everything. An authoritative source lets a person see for themselves what the rules are. That is better than asking people who don't know me to take the word of someone they can't check out.

    I hope the purpose here is to help people and help point them to information, not just inflate our own egos trying to convince everyone how much we know. As bent out of shape as people get, I do have to wonder. As for me, I'll always provide an authoritative source for any advice on answers I give so it isn't just me saying so. I've represented a large number of people before the IRS on every topic imaginable, but there's no way anyone here would have any way to verify that so nothing substitutes for authoritative sources if someone is going to actually make a decision based on the things said here.

    I certainly don't want the responsibility of steering someone wrong, and then excusing it with a flippant "well, advice is worth what you pay for it". If I can't help someone, I'd rather remain silent.

    Bubba,

    I think its fairly clear from the posts that the OP has been primarily living in Italy in the last three years, in which case the home they live in in Italy would be their primary residence.

    Its also seem fairly clear that they now want to purchase a home in the US and classify the Italy home as a vacation home.

    If the situation is different from that then they will come back and say so.
  • 05-28-2009, 11:57 AM
    artnbarb
    Re: Will Owning a Home in Italy Affect the First Time Home Buyers $8000 Credit
    Thanks for your thoughts - gosh, you all aren't competitive, are you?! Anyway, at this point it seems that the deciding factor would be where do we spend the majority of our time. For all the other criteria:

    "Factors used to determine main home. In addition to the amount of time you live in each home, other factors are relevant in determining which home is your main home. Those factors include the following.

    Your place of employment.

    The location of your family members' main home.

    Your mailing address for bills and correspondence.

    The address listed on your:Federal and state tax returns,

    Driver's license,

    Car registration, and

    Voter registration card.

    The location of the banks you use.

    The location of recreational clubs and religious organizations of which you are a member.
    "

    I can verify that my US address is used for everything listed above except for the last one, but that's only becuase we don't belong to any clubs or organization. And yes, we do live with a relative in the states - our clothes are there, our 'stuff' is there, I cook there, do laundry there, etc., but it's still our home in the states even th we don't own the property.

    I'd still like to see the form that will be used to determine eligibility for this credit.
  • 05-29-2009, 06:11 AM
    Bubba Jimmy
    Re: Will Owning a Home in Italy Affect the First Time Home Buyers $8000 Credit
    There is no form. You make the correct determination based on the IRS publications and the law, and then file your tax return accordingly. If the IRS audits your return you could be expected to show records verifying the amount of time you spend at your home in the U.S. and how much time you spend at your other home. Passport stamps, travel documents, etc. If you have been deducting anything relating to the property in Italy such as mortgage interest then you might reasonably expect to have a claim as a first time home buyer examined.

    And my only goal is to help you get the information you need to make the correct determination, which is what you came here for, not to make assumptions on your behalf. If that is perceived as "competitive", sorry. I see a lot of blatently wrong information given to people. If I don't believe I can be of help, I remain silent. I hope I've been helpful.
  • 05-29-2009, 12:48 PM
    llworking
    Re: Will Owning a Home in Italy Affect the First Time Home Buyers $8000 Credit
    There is another issue that you needs to be addressed as well, and I should have thought of it sooner.

    Do you have earned income in Italy? Have you been filing a form 2555 and taking a foreign earned income exclusion? If so, that would be a declaration that Italy is your "home".
  • 05-31-2009, 01:09 AM
    artnbarb
    Re: Will Owning a Home in Italy Affect the First Time Home Buyers $8000 Credit
    Nope, no income in Italy, we're retired. Thanks to everyone for their input. I guess if we do buy a house in the states before Dec 1st I'll have to check my passport and records to make sure that I've spent over half my time in the states.
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