Am I qualified for the new first-time-home-buyer $7,500 tax credit?

Question

I am in the process of a short-sale house purchase. The house then will be rented back to the current owners with the hope that they can eventually re-purchase it.

My question is whether this purchase qualifies for the $7,500 tax credit in the new federal housing law. I have rented myself for many years, so I am a first-time buyer. However, I will not use the newly purchased house as my principal residence, which seems to be another requirement. Any help is appreciated

Answer 1

No you do not.  Go to this link for COMPLETE answers on the credit.

http://answers.yahoo.com/question/index;...

Answer 2

Get a lawyer immediately. And while I'm not a lawyer so this isn't legal advice, get out of the deal immediately. You're playing with a couple of sticks of dynamite and standing in a pool of gasoline.

A short sale by itself is OK. Keep in mind, though, that they can take months and months. They're unpredictable. And they often fall through. But some succeed and if you know the drawbacks, OK.

The rentback and option to purchase will get you into a huge amount of trouble. There are many court cases across the country where investors have done what you're planning on doing--some investors were legitimate, some were running cons--and have ended up fined, in jail, or both. In fact, what you're talking about is a felony in at least one state (Maryland), and the option end of it is illegal in at least one state (Texas). Other states are looking at the Maryland model in particular.

So what's the problem? Even if the seller weren't in a short sale situation, sellers have often argued in court (successfully) that they didn't really understand that they were selling their homes. They thought they were somehow getting a loan bailout. And the courts believed them.

In addition, few sellers are able to rebuy their homes. Look: The seller has already ended up in preforeclosure because they couldn't make payments to the bank. What happens when they can't make payments to you? You try to evict them and they'll claim fraud. And your deal hinges on their being able to repurchase it. Sure. They've ruined their credit with a short sale, and there's some question about their money management ability. You think they're going to be able to qualify for a new loan?

Then, I wouldn't be surprised if the lender being shorted came after both you and the sellers for mortgage fraud. The seller is asking the bank to forgive a portion of the loan. What happens, a year or two from now, if the bank finds out that the seller is repurchasing the home for less than he/she bought the home for previously?

There are a whole slew of other problems, too...too many to go into, here. But: Get a lawyer and ask his advice. (Make sure he's a real estate lawyer.) Ask him about mortgage fraud and Maryland's SB 761.

A short sale is OK the leaseback and option is not.

Oh, and if you read the new legislation, it's not even really a tax credit.

Good luck.

Answer 3

no.  sound tu me like a lotta triks so em hu R in the hous kan keep it=avoid forkloes.

Lawyers will kum flokking tu fite over this.  Em take all the munee from both av yu.

yu both go bankrupt.

Answer 4

You hit it on the head, investment properties are not eligible for the tax credit, must be principal residence.

Answer 5

You should be qualified for the tax credit since you are a first-time homebuyer. But as you mentioned, you will not use it as your principa residence. I can suggest a couple of things: first, stay in it until it is alright for you to cease living in it, just to make sure that you avail of the tax credit; second, check out the Federal Housing Administration's site or HUD.

This article might give you some help:

http://new.housingassistancenetwork.com/...

or:

http://www.mortgages-for-everyone.com/ne...

You can get a lot of info from both sites. Goodluck on your home-hunting!