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New Documentation Requirements for the Homebuyer Credit

TaxAlerts Tax Article

January 2010 | Written by: Karen Reed, EA

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If you are claiming a homebuyer credit on your 2009 tax return, the IRS requires that you mail your return along with certain documents proving that you are eligible to receive the credit. The IRS’s electronic filing system will not accept your return if this credit is claimed.

First–time homebuyers should attach a copy of the settlement statement showing all parties names and signatures, the property address, sales price, and the date of purchase. Normally, this is the properly executed Form HUD–1, Settlement Statement. If you purchased a mobile home, you can send a copy of the executed retail sales contract showing all parties names and signatures, the property address, purchase price and date of purchase. For a newly constructed home, the IRS will accept a certificate of occupancy showing the owner’s name, property address and date of the certificate if a settlement statement is not available.

If you qualify for a homebuyer credit as a long–time resident of the same main home, you must also show that you lived in your old primary residence for a five–consecutive–year period during the eight–year period ending on the purchase date of the new primary residence. Mortgage interest statements, property tax records or homeowner’s insurance records covering the five year period should be sent in addition to the purchase documents.

The IRS announced it will begin processing homebuyer credits claimed on 2009 tax returns in mid–February.