IRS RELEASES NEW FORM FOR CLAIMING THE FIRST TIME HOME BUYERS CREDIT

The IRS released Form 5405, to be used by taxpayers seeking to claim the First Time Home Buyers Credit and announced that the processing of returns claiming the credit will begin in mid-February. The accompanying instructions detail which documents must be included with the return in order to receive the tax credit;

• A copy of the settlement statement properly executed with all necessary information completed, and a properly executed HUD-1 Form.
• For mobile home purchasers, a copy of the sales contract.
• For a newly constructed home where a settlement sheet is not available a copy of the certificate of occupancy will suffice.

The new law enacted in November, 2009, allows long term residents a tax credit for the purchase of a new home if they can demonstrate that they lived in their old home for a five year period ending on the date they purchased the new home. These taxpayers are required to attach documentation covering the five consecutive year period including;

• Form 1098 Mortgage Interest Statements,
• Property Tax Records, or
• Homeowner’s Insurance Records.

Most importantly the instructions state, “Taxpayers Claiming the First Time Home Buyers Credit, MAY NOT E File these returns”. This will likely mean longer waits for tax refunds. Click here for details.