Clarification on First Time Buyer Tax Credit: Who Qualifies?

For awhile, circumstances have existed where the application of the First Time Buyer Tax Credit is unclear.  For example, what about when a couple buy a home and one is a first time buyer and the other is not?   Or, what about when a parent co-borrowers with a child and the parent already owns a home?   Does the person who is buying for the first time qualify?  Do they qualify for the whole credit or only their half?

There is finally some clarification:

IRS Sets New Rules for Tax Credit
The IRS has spelled out guidelines for eligibility for the home buyer credit when co-borrowers purchase a property.

When a home-owning parent of an adult child co-signs for a mortgage and both names appear on the note, the IRS says that under some circumstances, the first-time home buyer can qualify for the whole amount.

The IRS says the parent doesn’t qualify for any portion of the credit, but if the child hasn’t owned a home during the three years preceding the current purchase and can qualify based on income, he or she can be allocated the entire $8,000 credit.

When unmarried individuals co-purchase a home and only one of them is eligible for the credit, then the full $8,000 can be allocated to the eligible buyer.

Source: Washington Post Writers Group, Kenneth R. Harney (12/04/2009)