Top 5 in Real Estate Network® Members are dedicated to providing you with the most up-to-date, helpful real estate information. This monthly newsletter, "Real Estate Matters," offers articles on a range of topics that will inform you in your real estate pursuits.

Internal Revenue Service Releases New Home Buyer Credit Form

The Internal Revenue Service recently released the new form that eligible home buyers need to claim the first-time home buyer credit this tax season and announced processing of those tax returns will begin in mid-February. The IRS also announced new documentation requirements to deter fraud related to the first-time home buyer credit.
The new form and instructions follow major changes in November to the home buyer credit by the Worker, Homeownership, and Business Assistance Act of 2009. The new law extended the credit to a broader range of home purchasers and added new documentation requirements to deter fraud and ensure taxpayers properly claim the credit.
With the release of Form 5405, 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. Taxpayers claiming the home buyer credit must file a paper tax return because of 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. The updates allow the IRS to put in place critical systemic checks to deter fraud related to the home buyer credit.

Some of these early taxpayers claiming the home buyer credit 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.

In addition, the new law allows a long-time resident of the same main home to claim the home buyer credit if they purchase a new principal residence. To qualify, eligible taxpayers must show that they lived in their old homes 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 encourages 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.

The IRS also reminds home buyers that the new documentation requirements mean that taxpayers claiming the credit cannot file electronically and must file paper returns. Taxpayers can still use IRS Free File to prepare their returns, but the returns must be printed out and sent to the IRS, along with all required documentation.

Normally, it takes about four to eight weeks to get a refund claimed on a complete and accurate paper return where all required documents are attached. For those home buyers filing early, the IRS expects the first refunds based on the home buyer credit will be issued toward the end of March 2010. The IRS encourages taxpayers to use direct deposit to speed their refund.

For more information, visit www.IRS.gov.

Copyright© 2017 RISMedia, The Leader in Real Estate Information Systems and Real Estate News. All Rights Reserved. This material may not be republished without permission.




Office:
Mobile:


RISMedia Real Estate News

* This monthly newsletter is brought to you by your Top 5 in Real Estate Network® Member Agent and is intended as educational information only.

RISMedia's Top 5 Real Estate Network® is a network created by, for, and of "leading real estate professionals" who are dedicated to providing "leading real estate information to consumers." The RISMedia Top 5 in Real Estate Network is backed by the commitment and resources of RISMedia. Top 5 was created to fill a profound void in how high-impact consumer relevant information was presented by leading real estate industry members to increasingly sophisticated, discerning, and demanding consumers, in order to both sustain and elevate the ongoing viability and appeal of the industry's leading professionals. For more information, visit manage.top5inrealestate.com