My parents built a new house and gave me their old one, which is the first home I've ever owned. I applied for an $80,000 fixed-rate home equity mortgage to update the place, which is the first mortgage I've ever had. Am I eligible for the first-time homebuyer tax credit?
A: No. The guidelines that explain how to claim the tax credit, found in IRS form 5405, state that you cannot claim the credit "if you acquired your home by gift or inheritance."
On the bright side, interest on your home-equity mortgage should still be tax deductible, no matter how you acquired your home. Next January, or possibly February, your lender will send you a piece of paper which indicates the amount of interest that you paid during 2009 -- save that piece of paper for your accountant. Or, if you do your own taxes, that's a figure that you'll enter on your Schedule A.