IRS 5405 - The Relative Clause: Disqualifying Legitimate Home Buyers
We made a legitimate purchase; we want to be treated as a legitimate buyer.
The "relative clause" of IRS Form 5405 is the IRS's thinly veiled attempt to avoid the necessary labor and paperwork to follow up on the home purchases of legitimate related buyers. I understand the intent is to curb abuse of invalid transfers, but the families and individuals of legitimate purchases are suffering. Additionally, the local economies of those impacted by denial of the credit are also deeply affected.
Apparently our CPA is the first person (or the first resource altogether) that we've encountered that has prior knowledge of this "relative clause". Our loan officer, attorney, and Realtor (all well-qualified real estate professionals) were unaware of any disqualifying conditions that would have applied to our situation, specifically of IRS Form 5405, Part I, Line E which states "Did you purchase the home from a related person or a person related to your spouse". This fine print was withheld to encourage "purchase first - disqualify later" buying, as it failed to appear on the Dept of Housing website nor the IRS at the time of our purchase.
My husband and I purchased our home from my parents - at fair market value (as identified by the local market and affirmed by our credit union's independent appraiser), and we have taken out a first mortgage from a commercial lending institution. We paid the full amount any other party would have paid.
My parents purchased another home - they will receive their credit. However since we are not receiving the credit, we will not be able to reinvest into our home or back into our local economy. We are being discriminated based on a relationship to the previous owner and the lack of effort on the IRS. That legislation makes assumptions that all related buyers are abusing the system; an unjust statement of all buyers.
http://homebuyerinjustice.blogspot.com/
- We have less money to reinvest into the property. This means we are not able to perform additional improvements on the property which could have increased property value - impacting the value and aesthetic appeal toward our neighboring properties.
- We have less money to reinvest into the community. By not receiving the allocated credit, we are spending less in our local economy. This negatively impacts the bottom line for our local business owners and also prevents the collection of state and local sales taxes. Those taxes are vital to our region, yet we will continue to pay increasing property taxes to compensate for what sales tax revenue is lost.
- We have less money to reinvest into American goods and labor. The purpose of this credit is to pump money back into our national and local economies, and failure to receive this credit robs us from the opportunity to do so. Part of our credit would have been allocated toward the purchase of a new Chevy (seems only right, living in GM-land). Without this credit, we need to delay the purchase of a vehicle and that delay could potentially put our family, friends and neighbors, loyal GM employees, out of a job.
We made a legitimate purchase; we want to be treated as a legitimate buyer.
Apparently our CPA is the first person (or the first resource altogether) that we've encountered that has prior knowledge of this "relative clause". Our loan officer, attorney, and Realtor (all well-qualified real estate professionals) were unaware of any disqualifying conditions that would have applied to our situation, specifically of IRS Form 5405, Part I, Line E which states "Did you purchase the home from a related person or a person related to your spouse". This fine print was withheld to encourage "purchase first - disqualify later" buying, as it failed to appear on the Dept of Housing website nor the IRS at the time of our purchase.
My husband and I purchased our home from my parents - at fair market value (as identified by the local market and affirmed by our credit union's independent appraiser), and we have taken out a first mortgage from a commercial lending institution. We paid the full amount any other party would have paid.
My parents purchased another home - they will receive their credit. However since we are not receiving the credit, we will not be able to reinvest into our home or back into our local economy. We are being discriminated based on a relationship to the previous owner and the lack of effort on the IRS. That legislation makes assumptions that all related buyers are abusing the system; an unjust statement of all buyers.
http://homebuyerinjustice.blogspot.com/
- We have less money to reinvest into the property. This means we are not able to perform additional improvements on the property which could have increased property value - impacting the value and aesthetic appeal toward our neighboring properties.
- We have less money to reinvest into the community. By not receiving the allocated credit, we are spending less in our local economy. This negatively impacts the bottom line for our local business owners and also prevents the collection of state and local sales taxes. Those taxes are vital to our region, yet we will continue to pay increasing property taxes to compensate for what sales tax revenue is lost.
- We have less money to reinvest into American goods and labor. The purpose of this credit is to pump money back into our national and local economies, and failure to receive this credit robs us from the opportunity to do so. Part of our credit would have been allocated toward the purchase of a new Chevy (seems only right, living in GM-land). Without this credit, we need to delay the purchase of a vehicle and that delay could potentially put our family, friends and neighbors, loyal GM employees, out of a job.
We made a legitimate purchase; we want to be treated as a legitimate buyer.
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