Tuesday, January 19, 2010

IR 2010-6 Home Sale Exclusion

The IRS has issued the new Form 5405, First Time Homebuyer Credit and Repayment of the Credit.  This form is to be used to claim the first-time and second-time homebuyer credit on 2009 Income Tax Returns.  The IRS announced that it will begin processing 2009 returns that claim the credit in mid-February.  2009 returns claiming the credit cannot be filed electronically.

One of the following documents must be attached to the new form:

1.    A copy of the settlement statement  showing all parties' names, addresses and signatures, the address of the property, the sales price and the date of purchase.

2.    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.

To qualify for the "long-time resident credit" (the second-time homebuyer credit) the IRS is requesting the following documents to prove the 5 consecutive-year period out of the eight prior years requirement:

1.   Copies of Form 1098, Mortgage Statement for the applicable years, or

2.   Copies of property records, or

3.   Homeowner's Insurance records.

To view a copy of the new form go to the following IRS website address:

http://www.irs.gov/pub/irs-pdf/f5405.pdf