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Lev
Lev, Tax Advisor
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I purchase a first time home in a senior mobile home park.

Resolved Question:

I purchase a first time home in a senior mobile home park. I had to submit a cashiers check to the corporation for my equity share. The mobile home went through escrow with the seller. I would assume I get credit on both the escrow of the home and the equity share. Is that correct? I could only find this in the 5405 form instructions:
Who Cannot Claim the Credit
You cannot claim the credit if any of the following apply.
b. A corporation in which you directly or indirectly own more than 50% in value of the outstanding stock of the corporation.
My equity share is 1 of 144 shares.
Submitted: 4 years ago.
Category: Tax
Expert:  Lev replied 4 years ago.

In order to claim a first time home buyer's credit - you need to purchase the home.

The part of the instructions that you pointed above covers the situation when the seller is the corporation which you own.

 

From your information - it is not clear who is the buyer of the home - you or the corporation.

If the corporation is the buyer - it may not claim the credit.

If you are a buyer - you may claim the credit regardless if the corporation paid for you or provided a loan to you.

Please review the purchase contract and the title - if your name is XXXXX XXXXX title and in the purchase contract as a buyer - you may claim the credit.

 

Let me know if you need any help.

 

 

Customer: replied 4 years ago.

I know I can claim the credit on the home. I was asking if I can also include the cash amount paid for my equity share since is not listed on the home escrow closing statement.

I am the buyer of the home. The owner of the mobile home was owner of 1 equity share of the mobile home park. I had to give a cashiers check to the corporation for the equity share and be accepted by the board of Directors when escrow started, then after escrows on the mobile home closed I recieved my certification of my equity share and possession of my lot and home and the previous equity owner is sent the equity money I paid to the corporation less any debt that could apply to the previous equity owner.They equity share can only be purchased with cash. So in short it was like 2 transactions for me, however, I purchased the equity share and the home from the owner of my space but the home went through escrow and the corporation took the

Expert:  Lev replied 4 years ago.

Appreciate your clarification.

 

Generally - the IRS will look at your HUD-1 or another similar statement and compare the purchase price on that document and the home price reported on the form 5405 line 1 - http://www.irs.gov/pub/irs-pdf/f5405.pdf

 

See instructions for that line - http://www.irs.gov/pub/irs-pdf/i5405.pdf

Line 1. The purchase price is the adjusted basis of your home on the date you purchased it. This includes certain settlement or closing costs (such as legal fees and recording fees) and your down payment and debt to purchase the home (such as a first or second mortgage or notes you gave the seller in payment for the home).

 

As the purchase of the equity share is directly related to the purchase of the home - it should be included into the basis and therefore should be added to the purchase price for the credit.

However - to avoid questions form the IRS and delay with the tax refund - you might want to add a note with explanation of your situation and attach the copy of a document about the purchase of an equity share.

 

See also IRS publication 936 - http://www.irs.gov/pub/irs-pdf/p936.pdf

A qualified home includes stock in a cooperative housing corporation owned by a tenant-stockholder. This applies only if the tenant-stockholder is entitled to live in the house or apartment because of owning stock in the cooperative.

 

Let me know if you need any help.

 



Edited by LEV on 2/2/2010 at 7:19 AM EST
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22749
Experience: Taxes, Immigration, Labor Relations
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