5 Tips About First-Time Homebuyer Credit Documentation Requirements

Are you confused about the documentation requirements of the First-Time Homebuyer Tax Deduction?

Taking the First-Time Homebuyer Tax Deduction on your 2009 income tax return may result in a bigger refund but it can seem complicated. The Internal Revenue Service acknowledges that the settlement documents may vary from location to location, so here are 5 tips to clarify the documentation requirements.

Here are the top eight things the IRS wants you to know about the First-Time Homebuyer Tax Deduction:

  1. Settlement Statement: Buyers of conventional homes must attach a copy of Form HUD-1 or other properly executed Settlement Statement.
  2. Properly Executed Settle Statement: Typically, a properly executed settlement statement depicts all parties’ names and signatures, property address, sales price and date of purchase. However, settlement documents, including the Form HUD-1, may deviate from one location to another and might not include the signatures of both the buyer and seller. In areas where signatures are not required on the settlement document, the Internal Revenue Service recommends buyers to sign the settlement statement as they file their tax return — even in instances where the settlement form does not include a signature line.
  3. Retail Sales Contract: Buyers of mobile homes who are unable to get a settlement statement must include a copy of the fulfilled retail sales contract showing all parties’ names and signatures, property address, purchase price and date of purchase.
  4. Certificate of Occupancy: For new home construction, when a settlement statement is not available, attach a copy of the certificate of occupancy demonstrating the owner’s name, property address and date of the certificate.
  5. Long-Time Residents: If you are a long-time resident claiming the tax credit, the Internal Revenue Service advocates that you also attach documentation covering the five-consecutive-year period such as Form 1098, Mortgage Interest Statement or substitute mortgage interest statements, property tax records or homeowner’s insurance records.

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