Can you still get in on the home-buyer credit? You can, with these tips

Can you still get in on the home-buyer credit? You can, with these tips

PORTLAND, Ore. – The slumbering housing market bounced back in a very big way this past month. Sales of new homes shot up a staggering 27 percent – the biggest one-month jump in nearly 50 years.

Analysts are crediting low interest rates, improved home-shopping weather and fallen home prices. Indeed, the median sales price was $214,000, down more than 3 percent from February. And prices are expected to stay weighed down by foreclosures for a while. 

However, we also know that 1.8 million homes have sold with help from the First-Time Homebuyer Credit and Repayment of the Credit. And, despite many reports saying the federal cash-back deal expires April 30, it actually continues through July 1 with the right paperwork.

Here's what you'll need to claim $8,000 if you haven't owned a home for three years or $6,500 if you've owned another home for five of the past eight years:

  • To qualify, you must either close no later than April 30, or enter into a binding contract by May 1 and then close no later than June 30. After June 30, the economic boost will be gone.
  • You can buy the home you're living in now from your landlord. As long as it's your "principal residence," this type of transaction still meets the requirements for the credit. However, the seller cannot be directly related to the buyer. (Here are the types of ownerships allowed in Oregon; the same types of ownership reportedly apply in Washington.)
  • Eligible taxpayers simply need:

    • A home-purchase agreement signed by both parties – the buyer(s) and the seller(s) – on April 30 or sooner,
    • The ability to close on the home by June 30 and
    • A settlement statement, or HUD 1 form, completed on the day of the closing.

"At closing, some version of what's commonly referred to as a HUD 1 form is provided," said Richard Panick, an IRS field media relations manager from Seattle. "In the state of Oregon and other places, signatures are not necessarily required for all parties. If a HUD 1 is not available, then other documents that show that the transaction has in fact taken place" will suffice, Panick said.

Panick said that seller-financed purchases – which at this point would be the safest bet to meet the time crunch – count as long as there is documentation from the buyer and seller confirming that the sale has occurred.

"A title transfer would be a document that would help," he said. There are four types of real property conveyance deeds in Oregon and Washington: the Warranty Deed, the Special Warranty Deed, the Bargain/Sale Deed and the Quitclaim Deed. Blank copies of deed forms specific to Oregon and Washington can be purchased from Stevens-Ness Law Publishing Co.

"There also should be something that shows the purchase price ... because it's possible to transfer title and receive no compensation for it," Panick said. "So you'll want some sort of document not only that the transfer has taken place, but what the monetary consideration for that transfer was."

As for actually getting the credit as check, you'll need these forms:

  • Even until June 30, taxpayers can claim the $8,000 or $6,500 (or half of that if there are two buyers sharing the credit for the same home) on their 2009 or 2010 returns. To collect, simply file your 2009 return until Oct. 15 or 2009 amended return anytime over the next three years. An amended return simply means filling out a 1040X form, with the refund added, so the I.R.S. can cut a check.
  • Taxpayers who claim the credit on their 2009 tax return must file a paper – not electronic – return and attach Form 5405, First-Time Homebuyer Credit and Repayment of the Credit (see the instructions for help with the form), and a copy of the settlement statement used to complete the purchase.
  • Expect the check within six to eight weeks of filing your claim.

- Jennifer Meacham contributed to this report.
 

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