Sunday, December 20, 2009

First-time homebuyer $8,000 credit

First-time home buyers purchasing any kind of home—new or resale—are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after January 1, 2009 and on or before April 30, 2010. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner. A limited exception exists for certain contract for deed purchases and installment sale purchases.

To claim the credit, you cannot file electronically. You should attach a copy of Form HUD-1 (Settlement Statement) to your return. Also, before filing, it would be a good idea to submit Form 8822 to the IRS to show that you now reside in the new home. There has been a lot of fraudulent claims for this credit so the IRS may ask for a lot of additional information if it decides to get tough. One tax preparer reported that his client signed a statement saying that she had never owned a home before and provided the HUD form, then the IRS requested:

A copy of her driver's license

A copy of her latest pay stub.

A copy of her bank statement and

A copy of the receipt for latest mortgage payment.

I would recommend that you attach as much evidence as possible to the return to head off further demands for proof by the IRS.
NOTE: If you don’t qualify for the first-time homebuyer credit, you MAY qualify for a $ 6,500 credit if you buy a new home. There are several qualifications that must be met for this $ 6,500 credit.

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