Because of the level of bogus claims for the 2008 credit, IRS has been instructed by CONgress to ensure that you don't beat Uncle Sugar out of hard cash by fraudulently claiming the First Time Homebuyer Credit. They think you should actually buy a house before you get a credit. The revised requirements are similar to the rules for the Long Time Homeowner Who Buys A New House Credit.
I made the name up, but it is a real credit designed to encourage established homeowners to uproot their families and move to a new home. In case that makes no sense to you, just remember that this is simply an elaborate way to take tax money from you to benefit someone else, in this case certain homeowners and the real estate industry.
In case your forgot, the 2009 First Time Homebuyer Credit is equal to 10% of the purchase price of the home with a cap of $8,000.00.
- Both you and your spouse may not have owned a home during the previous three years.
- Unmarried co-owners may split the credit according to ownership interest.
- Rentals don't count.
- You must live in the home for three years.
- You must ink the deal by April 30, 2010 and close by June 30, 2010 to qualify
- There are other caps and technicalities as well, but that is the gist of it.
Here's what the agency wants in order for you to claim the First Time Homebuyer Credit:
- You must file a paper return (no e-filed returns permitted)
- You must properly complete Form 5405 and attach it to your tax return.
- Buyers of conventional homes should include a copy of Form HUD-1, Settlement Statement, or other settlement statement, showing all parties' names, property address, sales price and date of purchase.
- Mobile home buyers who are unable to get a settlement statement should include a copy of the executed retail sales contract showing all parties' names, property address, purchase price and date of purchase.
- The settlement statement that must be attached to the return is considered to be properly executed if it is complete and valid according to local law.
- Do yourself a favor and sign the HUD-1 Settlement Statement. Trust me, IRS will like this and it will expedite processing.
Long Time Homeowner Who Buys A New House Credit
This credit is available to people who buy a replacement house and have lived in their existing house for at least five years.
- Yes you must move
- No, you don't have to sell your existing home
- Five years of Form 1098, Mortgage Interest Statement, or substitute mortgage interest statements,
- Five years of property tax records or
- Five years of homeowner’s insurance records.
Basically, IRS is auditing you before the fact to ensure that you ain't a tax cheat.
Tip of the glass to Mrs TWC