Explore Properties at Southern California: IRS Expects Homebuyers To Crush it Prior to Deadline

Don't wait to take advantage of your opportunity for the extended US homebuyer income tax credit and its deadline of April 30, 2010.

The Internal Revenue Service has issued guidance on the two tax credit programs that are moving the real estate markets -- the $6,500 credit for repeat buyers, and the $8,000 first-time buyer credit.

The new IRS policy says Taxpayers need to submit to successfully obtain either credit. Congress has directed IRS to detail documentation standards and install monitoring systems to spot fraud.

Here's what the IRS agency wants to see:

- A fully executed IRS Form 5405 (see www.irs.gov) where taxpayers provide basic information supporting their claim of eligibility, including income and home purchase date.

- A copy of the "settlement statement" (HUD-1) that proves the sale and purchase transaction actually took place.

Nationwide, according to estimates by the National Association of Realtors, 1.5 million repeat purchasers and 900,000 first-timers are expected to apply for income tax credits this year.

For repeat purchasers, IRS wants documentation that, before latest purchase, they had lived in their former property for a consecutive five years out of the past eight years. This could be property tax records, hazard insurance records or copies of annual mortgage interest statements filed with federal taxes.

Be careful with this and contact your income tax professional or Certified Public Accountant.

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Harrison K. Long, Realtor & broker, Explore Group, Coldwell Banker Previews, Irvine, CA. CA DRE #01410855. ExploreProperties@gmail.com. Lawyer member of the California State Bar Association - State Bar number 69137. Helping People with their Best Decisions About Real Estate at Orange County, California.