THE PROCESS

Q. How do I claim the tax credit?

A. All eligible purchasers simply claim the credit on their federal income tax return. Specifically, the credit will be reflected on a new IRS Form 5405 that will be attached to the IRS Form 1040 tax return. You cannot claim the credit on Form 5405 for an intended purchase for some future date; it must be a completed purchase, Homebuyers must attach a copy of their HUD-1 settlement form (closing statement) to Form 5405 as proof of the completed home purchase. Form 5405 can be found at: www.lrs.gov

Q, Can ! use it as part of my downpayment?

A. No. Congress tried to find a way to make the funds available for closing costs, but found that pre-funding would, in effect, bring the IRS into the purchase and settlement phase of the transaction. However, the Florida Homebuyer Opportunity Program has a $30.1 million budget. And, the law implementing the program allows it to be automatically extended if the federal tax credit is extended; therefore, the Florida Homebuyer Opportunity Program can continue to help with downpayment assistance for those who qualify for the extended federal $8,000 first-time buyer tax credit as long as funding is available. But the Florida program is restricted to first-time buyers, and the previously established income limits of $75,000 for a single tax filer and $150,000 for those filing jointly still apply.

MAKING IT WORK

Q. If I buy a home in 2009 or 2010, can I apply the credit against my '08 or '09 return?

A. Yes. The law allows taxpayers to "elect" to treat qualified home purchases in 2009 or 2010 as if the

purchase happened on Dec. 31, 2008 (or if in 2010, on Dec. 31, 2009.) This means that the previous year's income limit applies and the election accelerates when the credit can be claimed. A benefit of this is that a homebuyer in 2009 or 2010 will know their prior year income limit, which helps the buyer know whether the income limit will reduce their credit amount. A taxpayer buying a home who wants to claim it on his previous year tax return, but who has already submitted the return to the IRS, may file an amended return claiming the tax credit using Form 1040X. Consult a tax professional to find out the appropriate steps.

Q. WiH I ever have to repay the credit?

A. If you claim the credit but then sell the property within three years of the date of purchase, you're required to pay back the full amount of any credit, including any refund you received from it. A few exceptions may apply.

Source: National Association of Realtors*; National Association of Home Builders

NOTE: This document is for Informational purposes and should not be construed as tax or legal advice. For specific advice, consumers should always consult a qualified tax professional.