Client purchased new main home in 2009. He was previously living in home owned by his irrevocable trust and then by his son. Client paid all property tax and mortgage as equitable owner. Is he eligible for Homebuyer Credit as First-Time homebuyer OR as Long-time resident?
I am going to go out on a limb and say.........................................................................................................................................................................................................................................................
no.
Irrevocable trust by definition means no control or ability to change assets or terms in trust. It also implies that your client has dissolved all ownership in trust assets which would include the house. Therefore, your client did not own home! And as long as he did not create the trust in the 3 years before buying new home, I think he qualifies for 1st time home buyer not long term credit. Revocable trust would be a different story.
If he had enough incidents of ownership to deduct interest and taxes using an "equitable owner" theory, he can't very well now claim that he had no ownership. So no FTHBC.
He could maybe make the argument that he qualifies for the long-term resident credit, but I'd anticipate needing to litigate it in order to be successful. Those costs are going to eat the credit amount up, but it's possible he could get a PLR for less than the credit amount.
