Existing Homebuyers Credit, a scenario with a twist.

I agree that it qualifies. Land is not an issue. What matters is that they use the new home as their main residence for 36 consecutive months.

I also believe that they should treat the first date of occupancy (not the purchase date) as the start of the 36 month consecutive period.

To me this looks like a major repair of your existing home (ie. totally replaced), so it does not qualify. But just going by common sense; did not read the statute.

You can't repair thin air. The old building was demolished and the remains removed. They purchased a new building. What was repaired?

My point was that demolishing and rebuilding is like a doing a really really really big repair. OK, analogies and metaphors don't work well in the IRS code.

The relevant part of the law is

I guess it boils down to what "subsequent" means. The instructions says "2. You purchased your new main home located in the United States".

Aside, the intent of the law was to keep house prices up by directly increasing demand. But rebuilding your home doesn't increase this demand directly. It might indirectly because a nice looking home in the neighborhood might increase the value of other homes around it. And it helps the construction industry, but it does not directly increase demand for the purchase of a new home. It would not show up in a statistic of new homes sold in county XYZ.

I know that appropriate documentation needs to be included with a paper-filed tax return to get the credit. With no land sale involved, I don't know how the paperwork will be treated when the IRS sees it.

He purchased a new main home. No different than purchasing a new mobile home and plopping it on a rented/leased or owned piece of land. I have no problem taking the credit.

Oh... I don't see how whether or not the sale shows up as a statistic is relevant. E.g., New home sales reported by the US Census Bureau in its stats excludes homes built by a general contractor on land you own. That home still qualifies for the credit.

The same as it is with the purchase of a mobile home.