The Internal Revenue Service released the new form that eligible homebuyers need to claim the first-time and move up homebuyer credit last month. They also announced new processing requirements to help deter fraud that has been related to the homebuyer credit.
The new form follows the major changes from November allowing an extension to the first time homebuyer credit up to $8000 and allowing move up buyers to qualify for up to $6500 also. With the new form 5405, eligible homebuyers can begin to file their 2009 tax returns. The biggest change to the process is that the form must be a paper return, you will not be able to electronically file your returns.
The additional documentation requirements will be the form 5405 and a copy of the settlement statement showing all parties signatures, property address, sales price and date of purchase. For mobile home buyers, you will need a copy of the executed retail sales contract showing the same information. For newly constructed homes, if a settlement statement is not available, you will need a copy of the certificate of occupancy showing the owners name, property address and date.
If you are a move up homebuyer, you may want to include documentation showing your mortgage interest statements, property tax records or homeowners insurance records for a five year period. Without that information, your return may be delayed.
The IRS expects to begin processing 2009 tax returns claiming the homebuyer credit in mid-February and they are expecting the first refunds to be issued by the end of March. If you use direct deposit, it will speed up your refund.
Be prepared to show the documentation to get your refund. Without that information, it will delay your return and take even longer to get your money back. This information is also available on the IRS website at www.irs.gov.
