Here in Iowa City it's condo buying season and there are lots of students out buying homes with their parents as co-signers. A question that came up for me last week was whether or not these students can claim the homebuyer tax credit. You might expect the answer to that to be no... Well, hold your horses, here's some info that shows it can go either way...
First of all, students who are claimed as a dependent by their parents will not qualify for the credit. HOWEVER, if they are not claimed as a dependent then it's a whole different story...
This is an excerpt directly from the IRS site.
S2. Taxpayer A is a single first-time home buyer. Taxpayer B (parent) cosigns for A and does not qualify.
A. Yes. Taxpayer B is not a first-time homebuyer and cannot claim any portion of the credit, but A may claim the entire credit ($7,500 for purchase in 2008; $8,000 for purchase in 2009), if the home was purchased as Taxpayer A's primary residence.
Here's a link to the original document and some different scenarios.
Here are a few links to other posts I've written about the homebuyer tax credit:
How the Homebuyer Tax Credit Works
Expanded Homebuyer Tax Credit Now Includes "Repeat Buyers."
You don't need to sell your home to qualify for the $6500 repeat buyer tax credit
Phase out range on income limits for the homebuyer tax credit
Of course I am not a tax adviser, so please don't make major financial decisions based on this post. It's much more about pointing you in the right direction for you to go and ask your CPA what applies in your specific situation.
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