Do I need to complete a form or application? Are there documentation requirements?

You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on line 67 of the 1040 income tax form for 2009 returns. Home buyers must attach a copy of their HUD-1 settlement form (closing statement) to Form 5405 as proof of the completed home purchase.  If you are unable to provide the settlement statement, an executed retail sales contract with the same information as a settlement statement or a certificate of occupancy in the case of new home construction is sufficient. 

To qualify for the Move-up/ Repeat Buyer, you must verify you have lived in your old home for a five-consecutive-year period during the eight-year period ending on the purchase date of the new home. The IRS recommends attaching, in addition to the documents described above, any of the following documentation of the five-consecutive-year period:

• Form 1098, Mortgage Interest Statement, or substitute mortgage interest statements,
• Property tax records or 
• Homeowner’s insurance records.

Note that taxpayers who claim the credit on their 2009 tax return must file a paper return because of the documentation requirements.

To download IRS Form 5405, visit http://bit.ly/annO0y.  If you need help determining your tax credit amount, a tax advisor can help you complete the form.  Or, if you have not yet purchased, but still want to take advantage of the great deals on homes that are still on the market, contact one of our Home Loan Specialist at 1-888-562-6200 for more information or to get pre-qualified for your loan.