If aprimary residence is rented out, does that trigger the payback requirement of the first time homebuyer’s credit?
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If aprimary residence is rented out, does that trigger the payback requirement of the first time homebuyer’s credit?
I live in IL and want to move out of state. I want to rent out my house but I received the first time home buyer credit and have only lived in home for 2 years. You are required to pay back credit if property is not your primary residence for 3 years. Is there any way to rent out the house now without having to pay back the credit? I was thinking that if I rented out and declared all the rent as income (as opposed to deducting depreciation, etc.) then I could keep the credit but would have a higher tax bill from the rental. Am I allowed to do that?
Asked on September 27, 2011 under Real Estate Law, Illinois
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
In order to get a specific answer to your question, you need to carefully read the written agreement concerning the first time home buyer's credit that you received when you purchased your home in that its terms and conditions control the obligations you owe under the credit you received in the absence of conflicting state law.
You need to look at the definition of "primary residence" within the document. Even if you move out of state for work or other purposes, do you intend your move to be permanent or temporary? Meaning, will you still continue to consider the home you bought your primary residence or not?
Another option to answer your question is to contact the entity in charge of this first time home buyer's credit and make further inquiries as to its terms and the facts applicable to you situation. You have already lived in the home 2 out of the required 3 years. Perhaps the credit agreement has other language pertaining to the last year of the program under your agreement that is beneficial to you.
Good question.
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