Dear Ali: I am a first-time homebuyer who worked extremely hard to get my credit score up, bought a house where the value was certified by an appraiser, and then qualified for a loan. I did everything the right way and have all the paperwork, but now I'm told that I don't qualify for the first-time homebuyer tax credit because the sellers of the house are my parents. I'm not even that close to my parents, I just liked the house! Isn't there anything I can do?
A: Sadly, you're out of luck on this one. The IRS states that you can't claim the credit if you buy the home from a "related person." That includes your wife or husband, in-laws, grandparents, and parents.
For the fullest explanation of the rules around the tax credit, follow this IRS link download Publication 17, and check out page 261.
If you haven't bought from your parents, you have just a few days left to grab the credit -- the timeline is that you need to be in contract by April 30 and close by June 30.