I sold the interest in my house in August of 2006. I continued to rent the house from my sister, and took 50% of the interest tax
write off for the next 3 years because I was making the payment, my sister took the other half.
Now in October of 2009, I purchased a home with an FHA loan, with the assumption that I met the criteria for the $8000 tax credit. It was over 3 years since I'd owned a home. MY realtor and loan agent both agreed that I do qualify.
Now after many delays getting my refund, I have been told by the IRS that I've been denied the FHA tax credit because Im a previous home owner.
My question is, was it ok for me to take the interest write off even though I was not the owner of the house? Would that still make me a home owner if I was writing off interest? If it is ok for me to write the interest off, would that not qualify me for the FHA credit because I haven't owned a home in over 3 years?
I had checked with an accountant and they said it was ok, but now Im concerned about contacting the IRS, because I don't want that to get me in trouble.