Charlotte Homes for Sale
Nina Hollander
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If you are a first-time home buyer or a move-up buyer, who has purchased your home after November 30th, here are the new IRS guidelines for what you will need to claim your tax credit.

The IRS has recently released the new form that eligible home buyers need to claim their tax credit this tax season and has announced that they will start processing these returns in mid-February. With the release of Form 5405 (“First Time Home Buyer Credit and Repayment of the Credit”) along with instructions on completing the form, you can now start filing for your tax credit. However, keep in mind that if you are claiming a home buyer credit, you MUST file a paper tax return because of the added documentation requirements. These documentation requirements include:

• A copy of the HUD-1 Settlement Statement you received at closing, which shows all the parties’ names, signatures, property address, sales price and date of purchase. If you purchased a mobile home, you will need to provide a copy of the executed retail sales contract showing all parties’ names, signatures, property address, purchase price and date of purchase.
• If you purchased a newly constructed home where a settlement statement is not available, IRS will accept a copy of the Certificate of Occupancy showing the owner’s name, property address, and date of the certificate.
• If you are claiming a “move-up buyer” credit for a new principal residence, you must be able to show thay you have lived in your old home for five consecutive years during the eight-year period ending on the purchase date of the new home. Proof of residency can include: Form 1098 (Mortgage Interest Statement) or substitute mortgage interest statements; property tax records; or homeowner insurance records.

The IRS has significantly stepped up its compliance checks for those filing for the home owner tax credit, so it makes sense to have all your documents together before filing. And, again, don’t forget, you can’t file for the tax credit electronically. You may still use IRS Free File to prepare your returns, but the returns must be printed out and sent to the IRS together with all the supporting documents providing proof of purchase and/or residence. Click here for more informaton about the Free File program.

Keep in mind it could take four to eight weeks for a refund claimed on a paper return (where all necessary documents are included on the first go-around). If you file early, IRS has indicated that the first refunds for home buyer tax credits will be issued in late March 2010.

KEEP IN MIND:  if you sell your home within 3 years/36 months, you may have to pay back the tax credit you receive in 2010.

For more information, visit www.IRS.gov. 

For more information about the First Time Home Buyer Tax Credit and to see if you qualify click here.

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