Advice for Those Seeking the Tax Credit

Taxpayers Seeking Homebuyer Tax Credits, Refunds Must File Paper
by Broderick Perkins

Homeowners filing for the home buyer tax credit are not allowed to use electronic filing and must file hard copies due to special documentation requirements.

Earlier this year, the Internal Revenue Service (IRS) deployed new home buyer tax credit forms and instructions requiring forms that will force taxpayers to file on paper, rather than electronically.


Under the new and expanded home buyer tax credit rule , the credit is worth up to $8,000 for first-time home buyers and up to $6,500 for qualifying existing home buyers, in both cases, who buy a primary residence or have one built.

The tax credit is refundable. A credit that is larger than the taxes owed is returned to the taxpayer in the form of a refund.

The home can cost no more than $800,000 and qualifying income is limited to a maximum of $125,000 for single taxpayers and $225,000 for joint taxpayers.

Get the full scoop online from the IRS' "First-Time Homebuyer Credit" page online.

In addition to Form 5405, also include at least one of the following documents:

• A copy of the HUD-1, Settlement Statement, showing all parties' names and signatures, property address, sales price, and date of purchase.

• For mobile home buyers who don't 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 new home buyers who don't get a settlement statement, a copy of the certificate of occupancy showing the owner’s name, property address and date of the certificate.

Existing home owners applying for the $6,500 maximum tax credit must additionally prove they lived in their old home for the required period.



Information courtesy of Realty Times