What happens to the first-time homebuyer’s tax credit in a foreclosure?
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What happens to the first-time homebuyer’s tax credit in a foreclosure?
My wife and I purchased a home in the summer of 2008. We filed our taxes and received the first-time home buyers tax credit (about $7,500). In 05/09 we left that home because we could not afford it anymore. I believe the house went into foreclosure. I am not sure as to what happened. In 06/10, my wife left me and we are now separated and going through a divorce. I am wondering what happens with the tax credit because I think it is due back. I have no idea what happened with the house and I have no idea what my wife is doing because we are not communicating.
Asked on April 17, 2011 under Real Estate Law, Florida
Answers:
MD, Member, California Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
Well, you absolutely need to find out if the home went into foreclosure, if it was foreclosed upon, how it is reported on all of your credit reports (Experian, Trans Union, Equifax and Innovis) and you need to find out if your state is a deficiency state or anti deficiency state. If the home went into foreclosure, did your lender sell it for what was owed on it so there wasn't a deficiency or is there money owed? If there is money owed, does it show up on your credit report as any sort of collections matter. Further, if the money is owed back to you in terms of the tax credit, you need to find out if your wife obtained it or if you can still amend your tax filings to try to obtain the credit. If you do obtain the credit, I believe you may need to split the amount with your wife. If you are represented by divorce counsel, talk to your counsel about this matter.
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