Q: How does one get information on what forms to fill out when buying a new home? It’s my understanding that a form needs to be completed within seven days after the close of a property. I was eligible last year and did not know I needed a form to complete and submit for a certificate.
So I have two questions:
1. Am I solely responsible to know the process, or does my agent have a responsibility to guide me through this?
2. Is there any way I can get this credit based on my purchase last year? I closed on March 15, 2009.
A: Let me state up front that I’m assuming you are referring to the federal first-time homebuyer tax credit. The tax credit is a tax issue, and real estate agents are actually advisers on real estate issues, not tax issues.
With everything in real estate, it is your responsibility to investigate and educate yourself regarding your rights and obligations, but many, many real estate agents do offer basic information about the various tax credits that are available to homebuyers — almost always with the caveat that homebuyers who are interested or think they might qualify should contact a tax adviser, like a certified public accountant or an enrolled agent, for more information.
In terms of educating yourself, these matters can be pretty self-service — though actually completing the paperwork and any strategic decision-making on real estate-related tax matters can and should be done with the advice or help of a tax professional.
The Internal Revenue Service website has detailed pages detailing the tax credit and eligibility requirements, and the National Association of Realtors has some very simple comparison charts and user-friendly guides to help you understand them, too.
There have been various versions of this credit over the last few years, so your closing date does matter. For an escrow closing on March 15, 2009, your federal first-time homebuyer credit would have been up to $8,000, and there was no limit on the purchase price of your home.
For that particular credit which applies to your closing date, you are eligible only if you had no ownership interest in a home for at least three years prior to buying your new home. There were income limits, though: $75,000 for a single homebuyer and $125,000 for married homebuyers filing jointly (although, if you made more in calendar year 2009 and are otherwise eligible for the credit, you might be eligible for a reduced amount of the credit).
The revision of the tax credit that went into place late in 2009 does have an anti-fraud provision that requires buyers to submit their HUD-1 settlement statement — which every seller and buyer of a home in America receives at or immediately after closing without completing any forms — to the IRS along with their tax return claiming the tax credit.
For your March 15, 2009, close of escrow date, you are not required to submit that statement or any other certificate with your tax return. However, it is advisable that you do so — there are reports that about one in five taxpayers being audited these days is someone claiming the tax credit.
Those who submit their HUD-1 settlement statement, which looks like a balance sheet with credits and debits in columns down the right-hand side, to the IRS are less likely to be audited and more likely to get their credit and refund quickly.
If you don’t know where your HUD-1 settlement statement is, drop an e-mail to your agent or your escrow closing officer or attorney. They’ll probably have a PDF version they can e-mail you quickly. Even if you’ve already filed your 2009 tax return, you are able to file a simple amended return claiming the credit, minimizing your liability and/or boosting your refund.
Tara-Nicholle Nelson is author of "The Savvy Woman’s Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.
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