Buyer tax credit effective but not available

WASHINGTON – Dec. 7, 2009 – With President Obama’s signature on Nov. 6, 2009, the first-time homebuyer tax credit was extended, and some move-up buyers became eligible for up to $6,500 starting on Dec. 1, 2009.

However, the new law changed the way a home sale must be documented to the Internal Revenue Service (IRS), including additional back-up information to minimize the chance of fraud. And that documentation change became effective immediately when the bill was signed.

But that new form is not yet available.

The homebuyer tax credit is claimed using IRS Form 5405, and that won’t change under the new program; however, Form 5405 must be revised to adhere to rules in the law signed Nov. 6.

Currently, the IRS has only the old version of Form 5405 on its website – the one that applies to sales that took place Nov 6, 2009, or earlier. The revised Form 5405 applicable to sales on Nov. 7, 2009, and later, will not be on the IRS website, according to IRS officials, until late December.

Buyers who close after Nov. 6 and use the old claim form may have trouble collecting their tax credit quickly.

For more information on the tax credit and Form 5405, visit the IRS website.

© 2009 Florida Realtors®