Same-sex couples denied property tax perks |
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The problem can be much worse if a same-sex couple no longer resides in the state where they were married.
Because
other states may not recognize their marriage or have jurisdiction over their divorce, a division of marital property incident to
divorce could require a lawsuit.
"The only way that they could possibly divide the
property, if, say, they bought a piece of real estate jointly, would
be for one partner to go into court and ask for a partition suit
to break the ownership and force the other partner to buy them out.
But if that were the case, capital gains tax would incur because
... the marriage is not between a man and a woman," Roth says.
First-time homebuyer tax credit
The Housing and Economic Recovery Act of 2008, signed by President Bush July 30, allows married couples to claim a $7,500 tax credit
if they buy a home together and neither of them has owned a principal residence during the last three years. The credit also can be
allocated into separate amounts if two people who aren't married purchase a home together, according to the text of the law. That
suggests that a same-sex couple could buy a home together and allocate the credit between them on their individual federal tax returns
if neither of them owned a home during the last three years.
"Again, they are going to be filing as single and be limited to $3,750 each," Roth says.
For purposes of this credit, a "first-time homebuyer" is defined as any individual "and if married, such individual's
spouse," who hasn't owned a principal residence during the prior three years. That means that if one spouse in a traditional marriage
had owned a home within the prior three years, that couple would be disqualified from taking the credit. But if one spouse in a same-sex
marriage had owned a home during the last three years and the other spouse hadn't, the latter spouse presumably could still claim a
portion of the credit because he or she would be considered single for federal tax return purposes.
Homebuyers should note that this tax credit is subject to a number of restrictions and must be paid back to the government
unless the home is later sold at a loss.
"People usually sell their house within five (years)
to seven years, which is only about one-third to one-half of the
way through the recapture period. The minute you sell that house,
you are going to trigger full recapture of any credit that you claimed,"
Roth warns.
Same-sex couples who marry in California or Massachusetts may also face a multitude of other legal and tax issues that
arise because their home state treats their relationship differently than the federal government does. These couples are thus all the
more strongly encouraged to seek advice from professionals who are familiar with these issues.
"A lot of these same-sex couples are going to have to go out and hire professional financial help," Roth says.
Given the complexities, that specialized assistance probably won't come cheap.
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