Home buyers looking to claim the federal first-time homebuyer tax credit won't be able to file their taxes electronically, and there are new documentation requirements they must meet designed to deter fraud.
Meanwhile homeowners claiming the credit who filed early may see two- to three-week delays before getting a refund, according to the Internal Revenue Service. The agency said it expects to start processing 2009 tax returns claiming the credit by the middle of this month after it updates and tests systems to meet new requirements. The updates will allow the agency to install systematic checks to deter fraud related to the credit, the IRS said.
Those claiming the credit must complete a new Form 5405 and include with their 2009 tax returns proper documents, including:
• A copy of the settlement statement.
• For mobile-home purchasers who are unable to get a settlement statement, a copy of the executed retail sales contract.
• For a newly constructed home where a settlement statement is not available, a copy of the certificate of occupancy is required.
Check with irs.gov or a tax planner for details on what the settlement statement, contract or certificate must show and other requirements.
The credit also can be claimed by a long-time resident of the same main home if that homeowner purchased a new principal residence. To qualify, taxpayers must show they lived in their old homes for five consecutive years during the eight-year period ending on the purchase date of their new homes. These homeowners must submit:
• A Form 1098, mortgage interest statement or substitute mortgage interest statements.
• Property tax records or homeowner's insurance records.
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