The first-time homebuyer credit that the government is now offering
first-time homebuyers allows you to take a one-time tax credit of up to
$8,000 (10% of the value of the home purchase price, up to a limit of
$8,000). It also lets you file for the tax credit if you bought your
home any time during the year 2009, and you simply have to claim the
credit by filing Form 5405 when you file your taxes.
If you wish, you can also amend your 2008 tax return, but doing so on
your 2009 return will likely give you the credit faster. In addition,
if you bought your home after November 6 but before January 1 of 2010,
you will not be able to amend or 2008 tax return, but can do so when
you file your 2009 tax return. If you are buying 2010, you
can claim a credit either when you file your taxes in 2009 or 2010.
If you claim the credit on a 2009 tax return, you have to file a paper
rather than electronic return because you have to verify your home
purchase with documents you'll attach to your return, then file them by
mail.
If you want to claim the credit, prepare your tax return just as you
would normally, and print and mail it, making sure that you've included
Form 5405, completed; also attach any other necessary homebuyer credit
documents (see below).
The documents that will be required by the IRS to claim the tax credit
include a copy of Form HUD-1, Settlement Statement, or another
settlement statement, as well as a copy of the retail sales contract
that was executed; it should show everyone's name and signatures,
purchase price, date of purchase, and the property address.
If the home was newly constructed so that a settlement statement is not
available, you can get a copy of certificate of occupancy that shows
the property address and owner's name, as well as the certificate's
date.
With a valid home purchase settlement statement, both the buyer and
seller signature should be on it, but in some cases, the signatures are
not legally required; in that case, the IRS will recognize a statement
that's complete and valid, even if the signature of the buyer is not on
the settlement form. You can, however, as the buyer sign the form
before you attach it to your tax return, and the IRS encourages this.
Even if the seller's signature is not on the settlement document, you
should still sign the document yourself as the buyer, according to the
IRS.
You won't be able to claim this credit on your tax return until you've
closed the sale. If you own the home for more than three years, you can
keep the credit, and will either have a refund that's increased by as
much as $8,000, or your taxes will be reduced as much as the credit
allows. You can't get this credit if you buy your home from a close
relative, or from a close relative of your spouse. Finally, it's not
available for homes that have been purchased at a value of more than
$800,000.
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