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Tax Credit News for your Buyers!

By
Real Estate Agent with REMAX Suburban

Good news homebuyers: You can file for your $8,000 first-time buyer tax credit again.

Bad news: You  can't e-file your taxes if you want the cash. And there are long delays.

 

  Last Thursday, CNN revealed that buyers who purchased their properties after Nov. 6 were unable to claim the refund because the Internal Revenue Service had yet to release a new form and instructions. But on Friday, the IRS finally posted the new form 5405.

First-time buyers used to able to immediately file for the tax credit after Congress approved it last February as part of the stimulus program. All they had to do was file an amendment to their 2008 tax returns (the ones they filed last April) and claim the promised refund of 10% of the purchase price, up to $8,000.

They were able to e-file, and they received their refunds promptly. But on Nov. 6 the rules changed. That's when Congress extended -- and expanded -- the tax credit, which was originally scheduled to expire on Nov. 30.

And these new buyers can no longer file electronically. They have to mail in paper forms, including the new 5405, whether they are amending their 2008 taxes or claiming it on the 2009 taxes that are being filed this spring.

Due to the abuse of the credit, IRS now requires that applicants now file documentation with their taxes -- including proof of residency, a signed mortgage statement and drivers license -- which the e-file system is not equipped to handle, which dramatically slowed down the refund process. Taxpayers are looking at another three months before they get their returns as a result.

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