IRS Form 5405 Needed To Claim Homebuyer Credit

The Internal Revenue Service has released a new form that eligible homebuyers must file in order to claim the first-time homebuyer credit this tax season.

The new form and instructions follow the extension and expansion of the homebuyer tax credit in November. In addition, there are now documentation requirements to deter fraud and ensure taxpayers properly claim the credit.

With the release of Form 5405, First-Time Homebuyer Credit and Repayment of the Credit, and the related instructions, eligible homebuyers can now start to file their 2009 tax returns. Taxpayers claiming the homebuyer credit must file a paper tax return because of the added documentation requirements.

The IRS expects to start processing 2009 tax returns claiming the homebuyer credit in mid-February after it completes the updating and testing of systems which put it in place critical systemic checks to deter fraud related to the homebuyer credit.

In addition to filling out Form 5405, all eligible homebuyers must include with their 2009 tax returns one of the following documents in order 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.

The expansion of the tax credit includes “move up” buyers (current homeowners) who purchase a new principal residence. To qualify, eligible taxpayers must show that they lived in their current homes for a five-consecutive-year period during the eight years prior to the purchase date of the new home. The IRS encourages homebuyers claiming this part of the credit to avoid refund delays by attaching documentation covering the five-consecutive-year period:

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

These homebuyers claiming the credit also cannot file electronically and must file paper returns with the supporting documentation.

The IRS encourages taxpayers to use direct deposit to speed their refund. In addition, taxpayers can use Where's My Refund? on IRS.gov to track the status of their refund.

More details on claiming the credit can be found in the instructions to Form 5405, as well as on the First-Time Homebuyer Credit page on IRS.gov.

Suzanne Dingley

Suzanne Dingley

Licensed Associate Real Estate Broker
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