IRS Clarifies What’s Needed to Claim Tax Credit
The Internal Revenue Service has clarified which documentation taxpayers need to submit to claim the first-time and move-up homebuyer tax credit.
While the IRS is still requiring the filing of Form 5405, it is not demanding that all parties’ signatures be on the HUD-1 settlement document in areas where requiring both the buyer and the seller to sign the document isn’t common.
The IRS clarification says: “In areas where signatures are not required on the settlement document, the IRS has clarified that it will accept a settlement statement if it is completed and valid according to local law. … The IRS encourages those buyers to sign the settlement statement prior to attaching it to the tax return.”
For repeat buyers, the IRS is seeking documentation that home buyers have lived in the previous property for a consecutive five of the past eight years. Proof can include property tax records, home owner insurance records, or mortgage interest statements.
Source: Washington Post (02/20/2010)
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Tax Credit Encourages Buyers to Shop Early
The homebuying season is starting early this year, thanks to the expanded first-time and move-up homebuyer tax credit.
Typically, the busiest time for home shopping starts in March and continues through May, but this year buyers who want to take advantage of the tax credits have to have a signed contract by April 30 and close the deal by June 30.
That is getting people off the couch.
“The tax credit will absolutely have an effect,” says Pete Flint, CEO of residential real estate search engine Trulia.com. “It is going to shift demand from the later part of the year to the first part. January and February will be very strong. The next three months, there will be a surge in demand.”
Source: USA Today, Stephanie Armour (01/20/2010)
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The homebuyer tax credit
The homebuyer tax credit extension and expansion has passed the House by a vote of 403-12 after passing the Senate last night 98-0.
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Congress Urged to Extend Tax Credit
The National Association of REALTORS® is calling upon its 1.2 million members to urge Congress to extend the successful homebuyer tax credit into next year.
Since its inception earlier this year, the $8,000 first-time homebuyer tax credit has brought 1.2 million new buyers into the market—350,000 of whom would not have purchased a home without the credit, according to NAR. The credit is due to expire November 30.
“Now is the time for Congress to keep this recovery going by extending the tax credit through 2010 and making it available to more homebuyers. We have all seen how the credit has been a spur to bring homebuyers into the market, and have seen the beginnings of a real recovery in the housing market. Housing has always led this nation out of economic downturns, and can do so again,” said NAR President Charles McMillan.
Write Congress Now
REALTORS®, the leading advocates for homeownership and housing issues, will be writing to their Senators and Representatives to tell them of the successes with the tax credit thus far, and press them to extend and expand it now.
McMillan added that the market has improved, but it has not yet fully corrected itself. “The credit needs to be available for an additional period of time in order to sustain the progress that’s been made so we can continue to see our markets fully recover. Uncertainty about the future of the credit will dampen consumer demand. The only way we can assure that the progress we’ve made can continue is to extend the credit and to do that now,” he said.
As the current deadline for the credit looms, potential homebuyers need to complete a contract, satisfy any contingencies, secure financing, and go to closing by November 30. In today’s market, NAR estimates that it generally is taking between 45 and 60 days from contract to closing.
“That means potential homebuyers who qualify must act now, and so must Congress,” McMillan said.
Source: NAR
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Homebuyer Tax Credit – An update.
A $7500 tax credit that will be available for qualified purchase of a principal residence by a first time homebuyer between January 1, 2009 and September 1, 2009.
The credit does not require repayment. Individuals who purchase in 2009 using financing assistance from state and local mortgage bonds will be permitted to use the credit, as well.The $15,000 homebuyer tax credit didn’t survive the final negotiations on the stimulus bill. Instead, Congress slightly increased to $8,000 an existing $7,500 credit for first-time homebuyers and eliminated repayment provisions.Congressional negotiators said that $8,000 number isn’t yet finalized.
The move was sure to disappoint those who had favored a more generous $15,000 credit for all home buyers in the Senate bill. Full Story.
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