Documents You Need to Receive First-Time Homebuyers Credit

If you bought a home in 2009 and want to claim the first-time homebuyer credit this tax season, be prepared to provide extra documentation.

The Internal Revenue Service recently announced new documentation requirements to deter fraud, especially after changes in November extended the credit to a broader range of home purchasers (including long-time homeowners).

The first item to note is taxpayers claiming the homebuyer credit must file a paper tax return because of the extra documentation requirements. According to the IRS, in addition to filing out a Form 5405, you must include one of the following documents to receive the credit:

  • A copy of the settlement statement showing all parties' names and signatures, property address, sales price, and date of purchase. Normally, this is the properly executed Form HUD-1, Settlement Statement.
  • For mobile home purchasers who are unable to get a settlement statement, a copy of the executed retail sales contract showing all parties' names and signatures, property address, purchase price and date of purchase.
  • For a newly constructed home where a settlement statement is not available, a copy of the certificate of occupancy showing the owner's name, property address and date of the certificate.

Also, if you were a long-time resident in a home and purchased a new principal residence in 2009, changes detailed in the Worker, Homeownership and Business Assistance Act of 2009 allow you to receive a homebuyer credit. To qualify, you must show you lived in your old home for a five-consecutive-year period during the eight-year period ending on the new home's purchase date.

Because the IRS is doing added compliance checks for the homebuyer credit, you're encouraged to attach the following documentation for the five-consecutive-year period:

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

You can get more details on claiming the homebuyer credit and instructions for the Form 5405 by visiting http://www.irs.gov/newsroom/article/0,,id=204671,00.html.