While claiming the first time home buyer tax credit is a relatively straightforward process, it is imperative that you file for it in a timely fashion, submit all supporting documents, and avoid silly mistakes that can cause the processing of your claim to get delayed or even rejected. We will outline the process you need to follow but before you do anything, make sure you meet all the program requirements described here. Keep in mind that the credit cannot be claimed for a home you intend to purchase at some point in the future; it can only be claimed for a purchase that is already complete. You will need to provide a HUD-1 settlement form (or equivalent in cases where it isn’t used) with your application as proof of the completed purchase.
You essentially claim the credit on your federal income tax return. If you are claiming the credit on your 2009 return, you must file a paper return – it can’t be electronic! You first need to complete IRS Form 5405 to determine the amount of your credit. Note that even though this form is titled “First Time Home Buyer Credit”, it is also the one you should use if you are claiming the reduced repeat buyer tax credit. Next, attach a copy of your HUD-1 settlement form to Form 5405. If you purchased a mobile home and do not have a settlement statement, include a copy of the executed sales contract instead. If you bought a constructed home you may submit a copy of the certificate of occupancy in lieu of the settlement statement. The settlement form or substitute needs to show the names of all parties involved in the transaction, the property address, sale price, and date of purchase. If you are a long-term home owner applying for the repeat home buyer tax credit, you also need to submit one or more of the following documents proving occupancy of your previous home for a period of five consecutive years:
* Form 1098, Mortgage Interest Statement or substitute;
* Homeowner’s insurance records
* Property tax records
Lastly, package all your documents together and mail it in to the IRS. There are no other special forms to fill out or other procedures to follow. Just sit back and wait for your check to arrive in the mail!