Claiming Your First Time Home Buyer Tax Credit

If you are ready to claim your first time home buyer tax credit you will need to us the recently released Form 5405 from the IRS. Using this form first-Time Home buyer Credit and Repayment of the Credit, and the related instructions, eligible home buyers can now start to file their 2009 tax returns. Because of the late addition of this credit taxpayers claiming the home buyer credit must file a paper tax return due to the added documentation requirements.

The IRS expects to start processing 2009 tax returns claiming the home buyer credit in mid-February after it completes the updating and testing of systems to meet the law’s new requirements.

If you are one of the early taxpayers claiming the home buyer credit you may see tax refunds take an additional two to three weeks.

In addition to filling out a Form 5405, all eligible home buyers

must include

with their 2009 tax returns one of the following documents in order to receive the credit:

* A copy of the settlement statement showing all parties' names and signatures, property address, sales price, and date of purchase. Normally, this is the properly executed Form HUD-1, Settlement Statement.
* For mobile home purchasers who are unable to get a settlement statement, a copy of the executed retail sales contract showing all parties' names and signatures, property address, purchase price and date of purchase.
* For a newly constructed home where a settlement statement is not available, a copy of the certificate of occupancy showing the owner’s name, property address and date of the certificate.

Your Realtor or closing officer should be able to help you obtain these documents easily.

Don't forget that the new law allows a long-time resident of the same principal residence to claim the home buyer credit if they purchase a new principal residence. The qualification standard is using a home as a principal residence for a five-consecutive-year period during the eight-year period ending on the purchase date of the new home. The IRS has stepped up compliance checks involving the home buyer credit, and it encouraged home buyers claiming this part of the credit to avoid refund delays by attaching documentation covering the five-consecutive-year period:

* Form 1098, Mortgage Interest Statement, or substitute mortgage interest statements,
* Property tax records or
* Homeowner’s insurance records.

With these new documentation requirements this mean that taxpayers claiming the credit cannot file electronically and must file paper returns. Don't forget that the tax credit is set to expire and you must be in contract on a home before April 30, 2010 and close before the end of June 2010.

Find out more using this link Yes, the IRS has You Tube videos! Who knew!