Homebuyer tax credit extended past April 30th? (real estate, insurance)

[meilton]

I haven't seen any news on this, but I wonder what you think? Could the homebuyer tax credit be extended yet again?

My guess is there may not be a decision until sometime after the April 30 deadline. I figure the powers-that-be probably want prospective buyers who are on the fence to proceed with their contract before the deadline. Otherwise, they might continue to wait.

An extension of this credit would work out well for me also since I already have a contract on a house, but it probably won't be completed by the June 30th closing date requirement.

[johnrex62]

I heard a report on the radio this morning that 4 out of 5 tax audits conducted so far this year have had homebuyer tax credits claimed in the returns. Some consumer agency is reporting that this tax credit appears to be an audit trigger this year.

[tdhg566]

IMHO it's highly unlikely the credit will be extended again. But my opinion is worth what you paid for it.

[tdhg566]

Originally Posted by johnrex62

I heard a report on the radio this morning that 4 out of 5 tax audits conducted so far this year have had homebuyer tax credits claimed in the returns. Some consumer agency is reporting that this tax credit appears to be an audit trigger this year.

Audits conducted this year are on previous year(s) when the documentation requirements to claim the credit were more lax. As we found with the liar loan mortgage market, when you don't require documentation, incidents of abuse skyrocket. Now you have to turn in your HUD-1 along with the return. That helps quite a bit as someone would have to "dummy up" a HUD-1, which takes much more effort, to claim the credit falsely. 2009 returns won't be selected for auditing for at least 6 months minimum (what people may get this summer is a letter asking for more documentation or disputing a calculation-not an audit, just a letter). So hopefully these new documentation requirements will be sufficient to eliminate the credit as an automatic audit trigger.

[tdhg566]

Very optimistic thinking that the "powers that be" are capable of fine-tuning tax law to influence individual behaviours that occur within a two week period (i.e. trying to motivate people to do the deal rather than waiting). I'm pretty sure our elected officials aren't that good.

[cheryjohns]

I don't think it's going to be extended. We heard rumors through the Realtors' associations months prior to the old date last time - but nothing at all now. I think it's over this month.

As to the fraud - clients that bought last year had to provide their HUD statements - it was required then.

[diggity101]

As to the fraud - clients that bought last year had to provide their HUD statements - it was required then.

not according to any IRS forms. It was a suggestions that wise CPA's and agents gave their clients after seeing the IRS kick back a ton of rebates, but not a requirement.

[tdhg566]

Originally Posted by cheryjohns

...As to the fraud - clients that bought last year had to provide their HUD statements - it was required then.

Dig's comment is correct. I work as a seasonal tax advisor and last year we prepared many returns for people who claimed the credit in 2008 (as it existed then, in it's first and second forms) and we submitted their returns with no accompanying documentation (even though we reviewed the documents when completing the return). The credit has gone through three modifications and the current documentation requirements weren't issued until Nov 2009.

My earlier comment that the credit now requires the HUD form was incomplete. If you claim the $6,500 credit you also have to provide five years of ownership/occupancy documention: tax records, mortgage payments or insurance payments. Fortunately those are easily obtained from hcad.

[tdhg566]

getting the discussion back on track, here's a post on MarketWatch today

Home-buyer tax credit likely won't be extended Real Estate Weekly - MarketWatch

[cheryjohns]

Originally Posted by diggity101

not according to any IRS forms. It was a suggestions that wise CPA's and agents gave their clients after seeing the IRS kick back a ton of rebates, but not a requirement.

I don't know when I heard it was required - but sent the form on to people that bought fairly early in the time frame - kept it on file and gave it out at every closing. I was under the impression it had always been required. I guess I was wrong - but none of my clients had any problems.