Tax credit question...

[ScrimpAndSave]

My friends are buying a house and then are not married. The woman already owns a house (and is selling it) but her fiance is a new homeowner. If they are both applying for the mortgage, would they still be able to get the $8,000 tax credit even though she already has a home?

Thanks!

[simpletron]

taken from form 5405, page 2 http://www.irs.gov/pub/irs-pdf/f5405.pdf

Part II credit

line 1. If two or more unmarried individuals buy a main home, they can alllocate the credit among the individual owners using any reasonable method. The total amount allocated cannot exceed the smaller of $7,500($8,000 if you purchased your home in 2009) or 10% of the purchase price. See Purchase price on page 3.

Note. 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.

basically, he can claim the whole credit on his return and she gets nothing on her return. if they get married, they can't get the credit.