The Homebuyer Assistance and Improvement Act of 2010 (H.R. 5623) was signed on July 2, 2010, by President Obama. The bill permits first-time homebuyers to qualify for the $8,000 credit. It also allows who have lived for five years in their current residence to purchase a new home and receive a credit of $6,500. In both cases, the buyers must have signed a contract for purchase by April 30.
Following the signature by the President, the IRS published a letter with explanations on how to claim the credit (IR-2010-80). New homeowners will file Form 5405, First-Time Homebuyer Credit and Repayment of the Credit. With this form the new purchaser should submit a copy of the settlement statement, normally Form HUD 1, Settlement Statement. For mobile home purchasers, include a copy of the retail sales contract.
General Rules For Purchases Made in 2009 or 2010:
- Qualified 2009 and 2010 first-time homebuyers do not have to repay the credit, provided the home remains their main home for 36 months after the purchase date.
- 2009 first-time homebuyers may claim the credit on either their 2008 or 2009 returns, and 2010 first-time homebuyers may claim the credit on either their 2009 or 2010 returns.
- A taxpayer (or taxpayer’s spouse) who previously qualified for the District of Columbia first-time homebuyer credit is not disqualified from claiming the first-time homebuyer credit under the Internal Revenue Code.
- A taxpayer whose home was financed by the proceeds of tax-exempt mortgage revenue bonds is not disqualified from claiming the first-time homebuyer credit.
- Documentation Requirement: To claim the credit on 2009 or 2010 tax returns, taxpayers are required to submit a copy of their settlement statement.
Those existing home buyers who buy a new residence should include Form 1098, Mortgage Interest Statement for the past five years to show their ownership. Further information on claiming the homebuyer credit is available on: www.irs.gov