Main home for homebuyer credit?

I looked through the IRS web site and publications (5405) to try to get a clearer definition of main home or primary residence for purposes of claiming the credit for long-time resident of the same main home. What I don't see clearly is whether the new main home also has to become your legal residence (for state purposes). In Pub. 5405 main home is defined as, "Your main home is the one you live in most of the time. It can be a house, houseboat, mobile home, cooperative apartment, or condominium." Elsewhere on the IRS web site primary residence is defined as where you live most of the time.

While I expect the answer to be "no," I am trying to find out (without trying to find and read the appropriate US Code section) if we meet all the criteria for the long-time resident credit, and purchase a new home in a different state without selling our current home, and live in the new home most of the time (e.g., at least 183 days a year) for three years, but do not change our legal residence for income tax, voting, vehicle registration etc. purposes, can we properly claim the credit? I don't find anything about state residency requirement, only that you have to live in the new home "most of the time" for 36 months after the sale date.

Thanks.

...................................................................................... "The center of the universe always is someplace else."

Reply to
nhxl.newshosting.com
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The law for the credit defines a principal residence as having the same definition used in the law that allows one to exclude gain on the sale of your principal residence.

The Treasury Regulations are pretty clear on how that is defined even as it relates to someone who has more than one home. Lastly, this issue has been litigated and there are various rulings on the issue that exist. There is no bright line rule or test.

Here is the regulation:

(b) Residence?(1) In general. Whether property is used by the taxpayer as the taxpayer's residence depends upon all the facts and circumstances. A property used by the taxpayer as the taxpayer's residence may include a houseboat, a house trailer, or the house or apartment that the taxpayer is entitled to occupy as a tenant-stockholder in a cooperative housing corporation (as those terms are defined in section 216(b)(1) and (2)). Property used by the taxpayer as the taxpayer's residence does not include personal property that is not a fixture under local law.

(2) Principal residence. In the case of a taxpayer using more than one property as a residence, whether property is used by the taxpayer as the taxpayer's principal residence depends upon all the facts and circumstances. If a taxpayer alternates between 2 properties, using each as a residence for successive periods of time, the property that the taxpayer uses a majority of the time during the year ordinarily will be considered the taxpayer's principal residence. In addition to the taxpayer's use of the property, relevant factors in determining a taxpayer's principal residence, include, but are not limited to?

(i) The taxpayer's place of employment;

(ii) The principal place of abode of the taxpayer's family members;

(iii) The address listed on the taxpayer's federal and state tax returns, driver's license, automobile registration, and voter registration card;

(iv) The taxpayer's mailing address for bills and correspondence;

(v) The location of the taxpayer's banks; and

(vi) The location of religious organizations and recreational clubs with which the taxpayer is affiliated.

Reply to
Alan

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Thank you for the reply and the regulation information. Section (2) Principal residence does not seem to provide the "bright line rule or test" as you aptly noted. In our case, we would use the new residence the majority of time during the year. We are retired, have no earned income, and have no other family members living with us; we currently rent a place in the new residence state (CO). Drivers license, auto registration, and voting (unless we "unregister") are in the current state (OR). I suspect the address listed on the 1040 would be the most likely flag; and if we used the new address on both the federal and old state returns, IRS probably would not question it, and our current state (OR) might be happy to continue to receive whatever money they get from us. Our mailing address for bills and correspondence (e.g. utilities, real estate taxes, internet and cable) would be both addresses. Most of our bills are electronically received and paid. Our principal bank accounts show our current state (OR) address, but the Treasury bank routing number is for the state we moved there from (CO) and now are looking at buying a house in; the account was never changed, only the mailing address. We could change the account mailing address to the new residence. The religious organization (church) we are affiliated with are in both places and we donate to both while there.

So, I'm still not sure. The two conflicting items are we would use the new residence the majority of time during the year, but would not change our drivers licenses or registration; the other examples are split. The instructions for Form 5405 only state that your main home is where you live most of the time. I don't do anything that's clearly not permitted when it comes to income taxes, and whether or not we qualify for the $6,500 credit is not a determining factor in whether we buy the new residence. I could call the IRS, but likely would get different answers each time I call. Do you know of rulings that might apply here?

Thanks again for your helpful reply.

Reply to
nhxl.newshosting.com

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All I can tell you is that where you reside most of the time is a key factor. However, so is where you register your vehicles, which state issued your driving license and where you vote.

Reply to
Alan

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