Documentation Requirements For Homebuyers Credit Will Mean Headaches For Many
Many taxpayers will be surprised to learn that copies of documents must be included with their income tax returns in order to qualify for the federal New Homebuyers Credit. Consequently, those who claim the credit for 2009 will be ineligible for e-filing.
“When claiming this credit, taxpayers should study the instructions for Form 5405 carefully,” says Michael Gray, CPA, author of the Real Estate Tax Handbook. “Those who claim the new $6,500 long-term resident credit will have to include copies of one of the following items for five consecutive years during the last eight-year period: 1) Form 1098 Mortgage Interest Statement (or substitute); 2) property tax statement; or 3) homeowner’s insurance statement. Many people will not have kept these records. If you don’t provide the documentation, the credit will be disallowed.”
In addition, a copy of the property settlement statement (HUD-1) for the purchase of the residence for which the credit is being claimed, including signatures of the buyer and seller, is required to be included with the tax return.
For more information, call Michael Gray at 408-918-3161.
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