DoIi have to pay back 1/2 of the $8000FTH credit I received on a home purchase, if I transfer 100% ownership to the co-owner with no capitol gains?

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DoIi have to pay back 1/2 of the $8000FTH credit I received on a home purchase, if I transfer 100% ownership to the co-owner with no capitol gains?

I co-purchased a property with a friend (not related) 3 years ago and we both received the $8000 credit for first time home buyers (each getting $4000 as we separately applied for the credit). I have to live on the property for 36 months; I have 6 months left. I want to buy another house and transfer my 50% share to the co-owner with no capitol gains. I will be 3 months shy of the 36 month requirement at the time of closing. Do I have to pay back the $4000 if I do this?

Asked on January 1, 2012 under Real Estate Law, New York

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

You need to carefully read your agreement concerning the $4,000 tax credit that you personally received while the other person who purchased the property with you received the other $4,000. If you fail to reside in the property that you acquired for the full thirty six (36) months there is a very good likelihood that you will fail to abide by the terms for obtaining the tax credit of the $4,000.

If that happens, then there is a good chance that you will have to repay the $4,000 back. I suggest that you continue the close date on the other property that you want to buy, or close escrow on it and rent it out to a third person while you continue residing in the first unit that you acquired the tax credit with.


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