Publications
08.16.10
Procrastinators Still Have Time to Get Their Money Back!
by Sean Oh and Joyce Robinson
The first-time homebuyer credit has been extended to September 30, 2010 for about 180,000 homebuyers who cannot close the contract before or on June 30. If you are one of them, congratulations on your free money…almost. As there is no such thing as a free lunch, there are several cautions that the qualified homebuyers have to take to get their “free” money.
On June 29, 2010, Congress approved the extension for “First-time homebuyer credit.” However, the extension is only valid for those homebuyers that have already entered into a purchase contract on or before April 30, but were not able to close the contract on or before June 30 due to whatever the reason might have been. Now they need to close the contract on or before September 30, 2010 in order to be qualified for the credit. The National Association of Realtors estimates that this new extension will help approximately 180,000 home buyers who missed the June 30 deadline.
Both houses of Congress have done their job to help provide additional stability to real estate markets across the nation. Now, it is the taxpayers’ turn. In response to the approved extension, the IRS has also released more details on the extension and the required documentation.
Action Items:
All qualified homebuyers must file a paper return. You can still use your favorite tax preparation software like TurboTax and H&R Block, but you should print out the return and mail it to the IRS.
All qualified homebuyers should attach Form 5405 along with a copy of one of the following documents:
• For conventional homes, a copy of Form HUD-1, Settlement Statement, or other settlement statement, showing all parties' names, property address, sales price and date of purchase,
• For mobile homes, a copy of the executed retail sales contract showing all parties' names, property address, purchase price and date of purchase, or
• For newly constructed homes 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.
If you are a long-time resident [1] and purchased a new principal home, you should attach any of the following additional documentation from the five-consecutive-year period:
• Form 1098, Mortgage Interest Statement, or substitute mortgage interest statements,
• Property tax records, or
• Homeowner’s insurance records.
Keep In Mind:
For qualifying purchases in 2010, homeowners have the option of claiming the credit on either 2009 (amend if already filed) or 2010 return.
The credit must be paid back if one of the following happens during the 36-month period beginning on the date of the purchase:
• The taxpayer disposes of the residence or
• The residence ceases to be the taxpayer and spouse's principal residence—e.g., it becomes a vacation home, business property, or rental property.
Always Remember:
It is the taxpayer’s responsibility to make sure that all required documentations are included to avoid refund delay or an IRS audit.
If you have questions regarding this issue or would like additional information, please contact Joyce Robinson, jrobinson@argy.com or 703.770.6311, or Sean Oh, soh@argy.com or 703.770.1068, in Argy’s corporate tax department.
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[1] Long-time resident is a resident who has maintained the same principal residence for any 5-consecutive year period during the 8-year period ending on the date of the purchase of a subsequent principal residence. (IRC §36(c)(6))
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