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Category: Tax
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Experience:  CPA with tax experience.
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Daughter purchased our house in 2010. Paid 92.5% of appraised

Resolved Question:

Daughter purchased our house in 2010. Paid 92.5% of appraised value. Within the time guide lines for the $6,500 tax credit. Previously she owned a condo for five years. Read that a person cannot get credit if purchased from a relative? How can this be fair, this is a actual purchase with down payment, mortgage and closing. Feel she is entitled to the $6,500 tax credit how does she get earned credit, has already filed 2009 tax return?
Submitted: 7 years ago.
Category: Tax
Expert:  JKCPA replied 7 years ago.



Thanks for your question.


I know you won't want to hear this but the homebuyer credits cannot be claimed if you buy a house from a related person. For purposes of this credit, related persons include your spouse, parents, grandparents, children, or grandchildren. That is how congress made the law. I think they thought it would prevent people from buying a house from a relative for a fraction of the fair market value and then be able to claim this credit. Unfortunately, there is no provision for paying your relative a "fair" price for the home.


For reference, see Instruction 5405 (Rev. December 2009)


Sorry to be the bearer of bad news.

Best regards,


Customer: replied 7 years ago.
not fair for a legitimate sale. Who can I contact by phone or email to get a variance?
Expert:  JKCPA replied 7 years ago.

An exception for this type of issue that is clearly set in the tax law is just not given by the IRS. When you check "Yes" to Question E on Form 5405 , it simply states you cannot claim the credit.


You are welcome to call IRS at 1-800-829-1040 to verify the above information. You can also contact your U.S. senators or representatives to complain about the law if you would like to.


Hope this helps,



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