New Homebuyers Credit Rules and Tax Filing

The IRS has recently released Form 5405, the form that will be needed by elgible homebuyers to claim the first-first time homebuyer credit this tax season. Processing of those tax returns will begin in mid-February after the IRS completes the updating and testing of systems to meet the law’s new requirements. The updates will allow the IRS to put in place critical systemic checks to deter fraud related to the credit.

In addition, there has been an announcement that new document requirements will help deter fraud previously related to that credit. The new form and instructions follow major changes in November to the homebuyer 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 the new requirements. Some of these early taxpayers claiming the homebuyer credit may see tax refunds take an additional two to three weeks.

In addition to filling out a Form 5405, all eligible homebuyers 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 homebuyer 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 homebuyer credit, and it encouraged homebuyers claiming this part of the credit to avoid refund delays by attaching documentation covering the five-consecutive-year period:

o Form 1098, Mortgage Interest Statement, or substitute mortgage interest statements

o Property tax records or

o Homeowner’s insurance records.

If properly filed, those homebuyers filing early can expect the first refunds based on the homebuyer credit will be issued toward the end of March.

5 Times a Winner with Donated Appliances

Everyone is a winner when you donate appliances to charitable entities.
• The obvious is your tax deductible donation.. You can take the estimated value of the appliance off of your taxable income and save some money.
• The charitable organization will, often times, pick it up, saving you time and energy.
• You save the cost of the disposal fees at the landfill and, as long as the appliance is in working order or can be refurbished, there is no need to add it to the piles of junk. In addition, you are giving another family the possibility to use it.
• Since many thrift stores and charitable organizations often donate money to other non-profit organizations in the community, you are supporting many great causes.
• Many people need low cost alternatives to furnishing their homes.
In the end, you help yourself, the environment, needy families and possibly even members of your own family.