Same Sex Domestic Partners Qualify for First Time Homebuyer's Credit Even if One of Them Has Already Owned a House
Married couples often want to buy a house. Sometimes, one person in the relationship has never owned a house before, while the other one has. In that case, neither of them will qualify for the popular first time homebuyer's credit.
The credit gives people who buy a home for their first time up to $8,000. But you can't get the tax credit if you or your spouse has owned a home in the last three years. If you're spouse has owned a house in that time, even if you haven't, you still won't get the money.
But what if you're in a same sex marriage or domestic partnership?
It's one of the few times where it'll pay to be gay. You'll get the tax credit even if your partner has owned a house in the last three years.
The IRS does not recognize same sex marriages or domestic partnerships because of the Defense of Marriage Act. So, in terms of qualifying for the first time homebuyer's credit, the IRS will treat a gay couple as two unrelated people. Form 5405 [PDF] says how to allocate the tax credit when two unrelated people purchase a home:
If two or more unmarried individuals buy a main home, they can allocate the credit among the individual owners using any reasonable method. . . A reasonable method is any method that does not allocate all or part of the credit to a co-owner who is not eligible to claim that part of the credit.
This means that someone who otherwise qualifies for the tax credit can get the full credit amount (not just half) when buying the home with their same sex domestic partner, regardless of whether their partner qualifies.
Still, be careful when trying to pull a fast one on the IRS. The agency has said it will aggressively pursue people who try to commit fraud using the first time homebuyer's credit. Make sure you fully document the transaction and your relationship before purchasing the home.
