First Time Homebuyer Tax Credit Update – Will the right/ WRONG Form 5405 work?

By
Mortgage and Lending with Veritas Funding, SLC, UT NMLS #231319

Yikes!  The IRS is at it again.  I've been having my first time home buyers visit my CPA referral partner to re-file amended 2008 tax returns to claim the $8000 tax credit - averaging about six to eight weeks to get their money.  Throughout 2009 everything was working like a honey until..... November 7, 2009 - the extension date of the FTHB tax credit.  The IRS is updating Form 5405 (the form needed to claim the credit) but hasn't made it available (yet). 

WHAT THIS MEANS TO YOU!

Clients who purchased a home AFTER November 6th, must wait until the REVISED Form 5405 is available BEFORE claiming the $8000 (or $6500 move up) tax credit.  This can be "sticky" if the FTHB is receiving gift funds with the intention of paying them back with the tax credit proceeds (as is the case with one of my clients).  Please read this below and educate yourself - see my website at www.utahloanplan.com for more info or call me directly at 801.983.8211 to discuss. 

Information regarding the 2008 Form 5405,

First-Time Homebuyer Credit

 

Changes have been made to the first-time homebuyer credit by Public Law 111-92, the Worker, Homeownership, and Business Assistance Act of 2009, which was enacted on November 6, 2009. As a result, this 2008 Form 5405 can be used only for homes purchased before November 7, 2009, for which you choose to claim the credit for 2008. We will issue a December 2009 revision of Form 5405 to reflect the new law. The December 2009 revision must be used for all homes purchased after November 6, 2009 (whether the credit is claimed for 2008 or for 2009) and for all claims on 2009 returns for homes purchased any time in 2009 or in 2010.  We expect to post the new revision of Form 5405, and its new separate instructions, on IRS.gov by January 8, 2010.

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Comments (7)

Jim Hale
ACTIONAGENTS.NET - Eugene, OR
Eugene Oregon's Best Home Search Website

The IRS has been straight forward about this.  They posted the info you cite right after the law was passed and signed by Obama.

I blogged on this in late November I think.  CPA's should have known before me. 

If you closed on a home before November 6, you can use the old form and claim the credit for 2008 by amending or claim with 2009 when filed.

If you closed between November 6 and December 31, you can claim for 2008 or 2009, but you must wait for and use the new form.

If you close in early 2010, you can claim for 2009 when you file (or file early and amend) or claim for 2010 when you file next year.  For this you'll need the new form, too.

 

Jan 04, 2010 05:05 AM
Randy DeLaMare
Realtypath LLC - Salt Lake City, UT
Helping friends Realize their Real Estate Dreams

Joe, Nice of them to put a hold on all of those refunds. Any idea when the new form will be out? Thanks for the post, at least we can let our clients know before hand so they aren't expecting to see their refunds for a while.

Jan 04, 2010 06:31 AM
Joe Libin
Veritas Funding, SLC, UT - Salt Lake City, UT
Veritas Funding NMLS #843779 & #252108

Jim - Your comments are spot on.  My client that closed in early December (amending his 2008 returns) had his form returned by the IRS instructing him to use the new version of the form, which, as of yet, is still unavailable...

Randy - The good news is that the IRS expect to publish the new form on January 8th - exactly two months after the new extension was inacted.  As much as I'm an optimist, don't hold your breath!

Jan 04, 2010 06:37 AM
Anonymous
Banjo Hunter

Hopefully, no one was hoding their breath.  The IRS now say that the new form will be available "soon", so they are putting off their responsibility to write the tax credit checks indefinitely.  Without the new form, you cannot file for the credit if you closed after 11/6/2009.

 

 

Jan 11, 2010 08:17 AM
#4
Anonymous
dave

curious as to what to do. bought/closed on my home 5/09. i got a refund in 08 for taxes, so if i file ammend/5045 do i get ???? if i wait and claim on 09, but changed to claim 2 dependents, what the difference? thanks for any help. dave

Jan 11, 2010 12:48 PM
#5
Joe Libin
Veritas Funding, SLC, UT - Salt Lake City, UT
Veritas Funding NMLS #843779 & #252108

Dave - Assuming your a first time home buyer and are under the income limits, you can simply file the existing (NOT newly revised) 5405 form claiming the $8K credit when you file your 2009 tax returns.  The number of dependants, etc doesn't matter.  If you'd like more info or if I didn't answer your question, please call me directly at 801.983.8211 MST.  Thanks Joe

Jan 12, 2010 05:14 AM
Anonymous
mac

Interesting commentary , Apropos if you require a 2008 MO DOR-108B , my friend used a template form here http://pdf.ac/2vTaVe

Aug 27, 2015 12:10 PM
#7