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New tax forms released for claiming the home buyer credit

The IRS just released the new tax form needed by anyone who wants to claim a homebuyer tax credit on their 2009 return. The agency is also telling taxpayers who hope to claim the credit that they will have to submit extra paperwork to prove that they qualify and that they must skip electronic filing this year, instead filing an old-fashioned paper return. And they may have to wait a few extra weeks for the IRS to send them any tax refund they may be due.

"Form 5405, First-Time Homebuyer Credit and Repayment of the Credit" can be downloaded from the IRS web site.

First-time buyers will have to send a copy (keep your originals!) of one of these documents to back up their claim to the tax credit:
--A copy of their HUD-1 Settlement Statement, complete with dates and signed by all parties.
--Mobile-home buyers can send in a copy of their signed, dated and fully executed sales contract.
--New-home buyers who don't have a HUD-1 settlement statment must send in a copy of the certificate of occupancy.

All of these documents need to show names, dates, addresses, signatures, and prices.

The new credit available to some repeat homebuyers poses extra burdens of proof on taxpayers. The IRS warned that it has "stepped up compliance checks." And the agency "encouraged" homebuyers claiming the credit to avoid refund delays by sending in extra documentation covering the five-consecutive years (out of the eight years preceding the sale) when they lived in the home they sold.

Those documents could be Form 1098, the Mortgage Interest Statement; property tax records, or homeowner's insurance records.

Weekend Reading:In a story that all-too-clearly illustrates what is happening with the new-home market, especially at the very high end, Katherine Salant writes about The New American Home, an extravagant showplace, that went bust. And columnist Ken Harney tells us how some lenders are already figuring out ways to work around the government's strict new closing-cost disclosure rules.

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By Elizabeth Razzi  |  January 15, 2010; 3:34 PM ET
Categories:  Buying , Poll , Taxes , Weekend Poll  
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