With Recovery act of 2009 does a 3 family residence count for the credit or does it have to be a single family residence?
- posted
15 years ago
With Recovery act of 2009 does a 3 family residence count for the credit or does it have to be a single family residence?
Allocate the portion of this prperty that is your main home for the credit.
"Chris Ruehrwein" wrote
If you aren't living in any of it as your primary residence, then none of it counts. If you bought the whole thing and rent out two units and live in the third, then only 1/3 of the purchase price is used in determining the credit (assuming the units are of equal size).
You can't use non-residence property purchased toward this credit.
Three-family counts, as long as you are residing in at least one of the three units and meet the other requirements. You did not ask this but for the archives: Questions about how to compute the credit for these multi-family housing purchase situations are coming up more and more. Perhaps it will save time if the new homeowner completes line 1 of Form 5405. The credit is limited to $8000 (for purchases in 2009; $7500 blah blah for purchases in 2008) or 10% of the "purchase price of the home," whichever is smaller. So if one-third the purchase price of this 3-family residence is at least $80,000, then you have already maxed out your credit.
The most helpful commentary I have seen so far is at
Form 5405:
(HERA=Housing and Econ Recovery Act) (ARRA=Amer. Recover and Reinvestment Act)
Different question, but under the same topic: if someone has received the HERA credit $7,500 loan, as opposed to the ARRA credit $8,000 free and clear, can they chose to pay it all back before the 15 years are up?
I realize there is no economic reason why one would do this (unless you expect a lot of deflation over the next 15 years), perhaps it is an emotional issue for someone. In any case, it makes me wonder how the IRS is going to track a 15-year annual repayment history (similar to a previous thread here about getting a statement of estimated payments from the IRS). I guess there will be a separate line on the back of Form 1040 for the next 15 years (starting with 2010) showing the "other tax - homeowner's credit" amount due, then it would be just like tracking depreciation, loss carryovers, or any other multi-year tax-related transaction.
-Mark Bole
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