Real Estate Blog

The homebuyer tax credit is not turning out to be quite as easy as we all thought, nor will it be a quick refund, in some cases.

One, you cannot file a 1040 EZ to claim the tax credit!

Two, you cannot file tax returns electronically if claiming the tax credit!

Why no1040 EZ forms and no electronic filing and?

1040EZ - Because the IRS doesn't have a way to stop fraudulent tax credit refunds. The IRS cannot determine if a person owned a home—no auditing software in place--nor can they determine if they previously claimed a “mortgage interest” deduction within a 3-year time period. Only now, is the IRS building “auditing software” to “catch” previous homeowners who are trying to claim a FTHB tax credit.

Electronic Filing - Because the IRS now requires the HUD 1 or closing statement be attached to the 5405 form and they cannot be attached electronically.

Oh, and by the way, regarding the 5405 form…unless the home was purchased on or before November 6, 2009, there is NO FORM currently on the IRS website to file the amended return. And to give them time to audit the documents, the IRS is telling tax advisors to expect an average of a 16-week turn around time…and they may also request additional documentation.

Like what kind of additional information? Requesting a letter from a landlord, a copy of a driver’s license, etc... Unfortunately, the new law allows them to ask for additional info on amended returns.

If you are expecting an income tax refund AND a homebuyer tax credit refund, BOTH refunds could be held up for several months.

There's more but it's a bit confusing to explain. Try clicking on the links below to find out more of what the IRS has up its sleeve.

10 Important Facts About the Extended First-Time Buyer Tax Credit - 11-30-09 http://www.irs.gov/newsroom/article/0,,id=215827,00.html?portlet=7

First-Time Homebuyer Tax Credit - 11-24-09

http://www.irs.gov/newsroom/article/0,,id=204671,00.html

Any questions - call me, txt me or email me. :)