Wednesday, March 03, 2010

First Time Home Buyer Credit update

The IRS has reposted Form 5405 (First-Time Homebuyer Credit and Repayment Credit) with a special note concerning the attachment of the settlement statement.  The Form's instructions requires that a signed settlement statement be attached to 2009 returns claiming the credit. The special note recognizes the fact that depending on the jurisdiction the settlement statement may not contain the signatures of the buyer and seller.  Where signatures are not on the settlement statement the IRS is requesting that the buyer sign the settlement statement before it is attached to the return.  The full note is reproduced below:

"While the Form 5405 instructions indicate that a properly executed settlement statement should show the signatures of all parties, the IRS recognizes that the elements of the settlement document, often a Form HUD-1, may vary from jurisdiction to jurisdiction and may not reflect the signatures of the buyer and the seller.  The settlement statement that must be attached to the return is considered to be properly executed if it is complete and valid according to local law.  In locations where signatures are not required, the IRS encourages the buyer to sign the settlement statement prior to attaching it to the tax return even in cases where the settlement form does not include a signature line."