A family child care provider writes:
>We bought a home that qualified for the First-Time Homebuyer Credit. A year into living in our home, we started a Registered Home Daycare. We just received, from the IRS, a "Courtesy message about your First-Time Homebuyer Credit" that states: *The following examples are situations when a home is no longer considered a primary residence and the credit must be paid back: The home has been converted for rental or business use. Does running a daycare disqualify us?? Any thoughts would be greatly appreciated.
This is not the first time I have been asked about this. Clearly information coming from the IRS is causing concern.
As long as the home remains your primary residence, you shouldn't have anything to worry about. A home business which results in partial business use of the home does not trigger payback of the First-Time Homebuyer Credit.
The IRS is looking for home buyers who have converted their entire home to business, rental, or other usage and no longer using it as their main home.
Repaying the Credit (for Purchases After 2008)
If you purchased the home after 2008, you generally must
repay the credit if, during the 36-month period beginning on the
purchase date and after the year for which you claim the credit,
you dispose of the home or it ceases to be your main home.
This includes situations where you sell the home, you convert
the entire home to business or rental property, the home is
destroyed, condemned, or disposed of under threat of
condemnation, or the lender forecloses on the mortgage.
Posted on 2010-12-01 04:43:34