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I purchased my home from my grandmother in October of 2008, payed 75,000 for it. It appraised for 79,000 and I had to put 5000 down in order to get financing. What’s the difference??

1 Thought on Why does buying a house from a relative make you ineligible for the 7500 tax credit?
  1. Reply
    ken s
    March 22, 2013 at 10:49 am

    The government wants to be sure that you won’t get the tax credit then sell the home to your brother for 75,000, who will also get the tax credit before selling the home to your sister, who will also get the 7500 credit before selling the home back to your grandmother, who will also get the 7500 credit.

    This is the reason the govenrment won’t allow relatives to be involved in the buying and selling of the home.

    By the way, its not really a tax credit. It is a loan that would be paid back, interest free, for the next 10 years. Each year the IRS would keep 1/10th of the loan until you paid it all back.

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