First Time Home Buyer Credit

[AccTaxMan]

Many first time home buyers bought foreclosed house lately. Usually it takes some time for them to fix up a foreclosed house before they can move in. Do you require your client to have to first move in before you process the First Time Hone Buyer Credit for them? That's what I do and I know I have been pissing off a lot of my clients. I keep hearing them complain that their friends' accountants did not require them to do so. How do you handle the situation?

[Matt Sova]

Date of credit

On page 11-4 of The Tax Book it states that "Date of purchase is the date title closes." If it is new construction then it is "the date the taxpayer first occupies the residence."

I would say if they have closed on the home then the purchase is complete and the credit is available.

[David1980]

I would say if they have closed on the home then the purchase is complete and the credit is available.

Well ultimately it comes down to "Will they really use it as a main home?" Also, "Do I care?" Everyone has their own decision to make as far as where they draw the line. How much does the preparer need to see to do the return?

For example, if someone comes in and says they bought a home October 15th and want the long-term homeowner credit you tell them they don't qualify due to the date. They then say "Oh, it has to be after Nov 6?" and then "Actually I purchased it Nov 15th."

Do you simply preparer the 5405 without seeing any documentation? Require the documentation? Make them give you a walk-through tour of their new home?

Obviously there's no one right answer for everyone.

So with regards to homes being bought that need improvements, some may be uncomfortable preparing the credit. Especially if you get a bad vibe (I can think of a recent forum post where taxpayer bought new home and "intended" to move to home, but hadn't yet.)

[jimmcg]

My answer whenever I suspect their may be questionable intent to use the new residence as the primary residence in the near term future is to have the client attest to this fact by including it in my standard form engagement letter which is signed by the client. Proper documentation is essential whenever we know that the Feds are giving extra scrutiny to this area.

[Matt Sova]

6500 credit

David: Interesting concept except for one problem. You have to attach a copy of the closing document to the return now. So in your case even if they said it was "really" 11/15/09 you would be assisting in a fraud if you prepared the return for them because you MUST have a copy of the closing document showing an October purchase date.

After 4/30/10 any clients that come in I will be attaching a copy of the purchase agreement showing a date prior to 4/30 and a closing statement showing the closing date prior to 6/30.

[David1980]

David: Interesting concept except for one problem. You have to attach a copy of the closing document to the return now. So in your case even if they said it was "really" 11/15/09 you would be assisting in a fraud if you prepared the return for them because you MUST have a copy of the closing document showing an October purchase date.

After 4/30/10 any clients that come in I will be attaching a copy of the purchase agreement showing a date prior to 4/30 and a closing statement showing the closing date prior to 6/30.

I don't mail returns for customers. I give them a return, they mail it.