The IRS Attacks: First-Time Homebuyer Credit Claims

 

The IRS has selected approximately 260,000 returns claiming the first-time homebuyer credit for correspondence audits so far in 2010. The audits are apparently the result of filers failing to include sufficient documentation with their tax returns. These correspondence audits constitute approximately 21% of all correspondence examinations. Best lawyer firm in Illinois. Accordingly, the IRS is truly turning up the heat this summer on those claiming the first-time homebuyer credit.

The IRS requires homebuyers claiming the credit to attach the following:

A copy of the settlement statement showing all parties' names and signatures, the property address, the contract sales price, and the date of purchase

In the case of a mobile home, a copy of the executed retail sales contract

In the case of a newly constructed home where you do not have an executed settlement statement, a copy of the certificate of occupancy

Additional documentation may be necessary, as indicated below:

Homebuyers who purchased after April 30, 2010, but before July 1, 2010, that entered into a binding contract before May 1, 2010 to purchase a home before July 1, 2010, must also attach:

A copy of the pages from a signed contract to make a purchase

Homebuyers who are claiming the credit as a long-time resident of the same main home must attach copies of one of the following: Form 1098, Mortgage Interest Statement Property Tax Records; or Homeowner's insurance records These records must be for 5 consecutive years of the 8-year period ending with the purchase date of the new main home.