A Refresher Course on the Home Buyer’s Tax Credit

Did you buy a home last year or are you are planning to buy now?  Either way, there are some important things to remember about the home buyer tax credit.

What You Might Know

  • The credit applies to you if are a first time buyer or a repeat buyer.  You are considered a first-timer if you have not owned a home in 3 years. First timers can qualify for up to $8,000, while repeat buyers can receive up to $6,500.
  • You must have a signed sales contract by April 30 and have your closing on the property by June 30 in order to claim the credit (If you are in the military or foreign service, you have an extra year).
  • The home you buy must be your principal residence. If you are a repeat buyer, you don’t have to sell your old home, but you can rent it out or turn it into a second home while using your new home as you primary home.

For a complete summary of all criteria, see the official site.

What You May Not Know

  • Unless you applied all or part of your credit to your down payment or closing costs, you will receive your funds after you have filed your taxes.
  • To claim the credit, you must submit a copy of the HUD-1 settlement statement and IRS Form 5405 to claim either the first-time home buyer tax credit or the repeat home buyer tax credit.
  • You can claim your refund with your 2009 return, amend it if you have already filed, or save it for your 2010 return.
  • To claim the credit, you cannot E-file. You must mail a paper return because you have to send some supporting documentation (proof of residency, a signed mortgage statement and drivers license) along with the return.  If you use online tax software like TaxAct, you can use their forms but still must print them out and mail your tax return to the IRS.
  • It may take up to four months to receive your refund.

Before you blast the IRS for gross inefficiency and inflicting mental cruelty, blame your fellow citizens who tried to scam the government. The rules were changed with the November 6, 2009 extension to prevent fraud.

Despite the wait, the money is a good incentive to buy a home. Express Realty Services has a great selection of pre-owned homes in the greater DC area. Visit our website to find your next home in Maryland, Virginia, or DC.  Many are newly renovated and ready for you.

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