Taxpayer asks:
Does a duplex qualify as a main residence for first time home buyer credit purposes? If the person is going to live in one unit and rent the other unit do you have to allocate the purchase price for calculating the amount of the credit?
Taxgirl says:
Assuming that you otherwise qualify for the first time home buyer credit, the answer to your question is yes so long as the home is your main home. The IRS considers your main home where you live “most of the time” – that means that vacation properties or second homes would not qualify. But you are allowed to rent out part of your “main home” and still claim the credit, so long as the other requirements are met.
One quick caveat: Descriptive terms for real estate vary from place to place. I live in Philadelphia where each half of a duplex/twin is a separate residence – it’s described differently on the deeds and taxed as a separate parcel. Down South, where I grew up, a duplex is one parcel that’s divided with separate entrances. I am assuming that you mean the latter. Obviously, if you’re buying two separate residences – even if attached – both would not qualify as your “main home.”
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
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