By Eileen Ambrose, Baltimore Sun

The newly expanded first-time homebuyer and repeat homebuyer tax credit was signed into law more than two months ago, but many married, unmarried, or soon to be married tax filers, are confused about claiming these credits.

A Baltimore Sun reader named Josh wrote that he got married in August, and he and his wife were closing on a house in February. "I qualify for $6,500 as a repeat buyer, but my wife has never owned a home. Do we cancel each other out? So, we can't get the $8,000 that she would qualify for and I can't get the $6,500 that I qualify for?" he wrote. "This seems illogical and I would doubt that it was the goal of Congress."

Tax professionals say the statute's language is clear. "Both taxpayers must qualify if you are married," says Mark Steber, chief tax officer for Jackson Hewitt Tax Service. "It's pretty black and white."

The IRS says both spouses must meet the definition of a first-time or repeat homebuyer in order to claim either of the respective tax credits. The language that required both spouses to be first-time homebuyers to get the $8,000 credit is nearly identical to the wording for the $6,500 credit, tax experts say.

The IRS has stepped up compliance checks involving the home buyer credit for those with past homes and they must provide a mortgage interest statement, property tax records or homeowner's insurance records, to prove compliance with past residency criteria. Listed below are some frequently asked questions and answers from the IRS.

Q. I am a long-time principal homeowner but my spouse has lived there for only 3 years. Can we qualify for the long-time homeowner's credit if we purchase a new principal residence?

IRS: No. For married taxpayers, both spouses must have owned and used the same previous principal residence for 5 consecutive years out of the 8-year period ending on the date of purchase of the new principal residence to qualify for the credit. Because your home has been your spouse's principal residence for only 3 years, neither you nor your spouse can qualify for the credit.

Q. I am a long-time homeowner and my spouse is a first-time homebuyer and we purchased a new principal residence. Can we qualify for either the first-time homebuyer credit or the long-time resident homebuyer credit if we purchase a new principal residence?

IRS: No. For a married taxpayer to qualify for the first-time homebuyer credit for the purchase of a new principal residence, both the taxpayer and the taxpayer's spouse must be first-time homebuyers. Because you had an ownership interest in a principal residence during the 3-year period ending on the date of purchase, neither you nor your spouse can qualify for the credit. For a married taxpayer to qualify for the long-time homeowner credit for the purchase of a new principal residence, both the taxpayer and the taxpayer's spouse must be long-time homeowners of the same previous principal residence. Because your spouse is not a long-time homeowner of your principal residence, neither you nor your spouse can qualify for the credit.

Q. I am a long-time homeowner of a principal residence and my spouse is a long-time homeowner of a different principal residence. Can we qualify for the long-time resident homebuyer credit if we purchase a new principal residence?

IRS: No. For a married taxpayer to qualify for the long-time resident homebuyer credit for the purchase of a new principal residence, both the taxpayer and the taxpayer's spouse must have owned and used the same previous principal residence for 5 consecutive years out of the 8-year period ending on the date of purchase of the new principal residence. Because you and your spouse owned and used different principal residences, neither you nor your spouse can qualify for the credit.

Q. How does the allocation provision work when unmarried taxpayers purchase a home together and both qualify for the first-time homebuyer credit under different tests?

IRS: Co-purchasers who are not married may allocate the credit using a reasonable method. A reasonable method is any method that does not allocate any portion of the credit to a taxpayer who is not eligible for that portion of the credit. The maximum credit for a taxpayer who qualifies under the long-time resident test is $6,500, and the maximum credit for a taxpayer who qualifies under the first-time homebuyer test is $8,000. One example of a reasonable method is to allocate $6,500 to the long-time resident homebuyer and $1,500 to the first-time homebuyer.

Link: Tax Credit

Banks Pursue Mortgage Payoffs Long After Homeowners Default

By Kathleen M. Howley

Bloomberg, Jan. 28 -- When John King stopped making payments on his home in Coral Gables, Florida, two years ago, he assumed the foreclosure ended his mortgage contract, he said. Last month, a Miami-Dade County court gave collectors permission to pursue him for $44,000 stemming from the default.

King is among a rising number of borrowers who are learning that they can be on the hook for years after losing their homes in foreclosure. Banks are exercising their rights to pursue unpaid mortgage balances.

To get their money, they can seize wages, tap bank accounts and put liens on other assets held by debtors. Judgments such as the one levied against King usually tack on court fees, fines and interest.

The Federal Deposit Insurance Corporation (FDIC) tracks the amount banks collect after defaulted loans were written off. These mortgage recoveries rose 48 percent to a record $1.01 billion in the first nine months of last year compared with the year-earlier period.

The federal government spent $230 billion in the year ended in September to support homeowners facing foreclosure, according to the Congressional Budget Office in Washington. Those efforts didn't help people who had already walked away from their houses.

In states such as Florida, courts give mortgage holders as long as five years to seek a deficiency judgment and up to 20 years to collect. Deficiency judgments are not allowed in Missouri according to Kathy Swift, Integrity First Consulting.

The likeliest candidates for deficiency judgments are so-called rational defaults, according to Larry Tolchinsky, a real estate attorney in Hallandale Beach, Florida. In those cases, people who are current on their mortgages decide to walk away from a property because its value has sunk far below their loan balance.

"Walking away from a property comes with a cost, especially for people who otherwise have good credit," Tolchinsky said. "The bank is going to pull your credit report, and if you're current on your other bills they are going to come after you."

Short sales also may lead to deficiency judgments years after former homeowners have moved on, according to Ben Hillard, real estate attorney with Hillard & Rodgers, Largo, FL. "Banks are being very careful to preserve their rights, either outright in the short sale agreement or by using vague language that leaves that door open," Hillard said. About 90 percent of people who do a short sale think they are "off the hook."

That was the case when two of his clients, Brigitte and John Howard, sold their home in New Port Richey, Florida, almost two years ago without using a lawyer.

"We got a call out of the blue saying we owed $20,000," said Brigitte Howard, 45. "It was a shock. There was no mention in the short-sale contract that the bank might come after us for the difference."