I know Halloween is over, but at the Capital of Texas Enrolled Agents (CTEA) meeting I attended this morning, I heard a few more first-time home buyer credit horror stories I thought you might find of interest.
Many of the cases that the Austin Taxpayer Advocate Service office is dealing with right now are connected with amended returns filed in order to claim the credit.
As you might expect, a fair share of taxpayer mistakes have led to IRS run-ins.
Locally, as has happened everywhere, folks claimed the credit before they actually owned and occupied the residence.
Some married couples who file separate returns each claimed the full credit. Sorry, no doubling up allowed!
And some folks simply ignored the rule limiting the credit to
My favorite, though, was the tale of folks who, in an effort to "prove" that they bought a qualifying home, downloaded the sample HUD closing statement from that agency's Web site. They then sent that document in with their claim — with the word "SAMPLE" stamped on it! Nice try, you tax cheating fools!
In all amended home credit cases, whether because of honest mistakes or blatant tax rip-off attempts, the IRS is justified in holding up and eventually rejecting the credit claims.
And because of all the recent publicity about credit-related fraud, you can be sure IRS examiners are taking very close looks at every one of these filings.
Special circumstances: There are, however, other, more nuanced instances where first-time home buyer claims are being
stalled.
For example, what if you bought your home through a
non-traditional financing method, such as private financing or
rent-to-own, and have no formal, lending institution paperwork to prove
to the IRS that you're eligible for the credit?
The IRS is still trying to track down any public documentation of property changing hands to ensure that the credit is allowable.
Since in these cases it could take the IRS longer to verify that you did indeed buy a qualifying first home, it
probably would be well worth your time and money to hire a tax pro to make sure
you get the credit you deserve as quickly as possible.
It takes time: Of course, "quickly" is a relative term.
Even when there is no problem, be prepared to wait if you filed an amended return to claim the first-time home buyer credit.
The IRS folks at today's CTEA conference told audience members that it's taking the
IRS between 12 and 16 weeks to process home buyer credit amended filings.
Throwing good taxpayer money after bad credit? And there's another situation that's showing up at Taxpayer Advocate offices in connection with the first-time home buyer credit that stuns and upsets me.
Apparently, a lot of these new buyers got their credit and then quickly went into foreclosure. That means they have to pay it back.
Yes, even the $8,000 true credit, unlike the original $7,500 interest-free loan over 15 years version passed in 2008, must be repaid if you don't stay in the home for at least three years.
And getting kicked out because of foreclosure counts as a repayment circumstance.
"Tight credit? Not here," said one of the Austin Taxpayer Advocate reps. "We're still seeing people with low incomes getting loans for more homes than they can afford."
That, of course, is causing them financial and tax trouble, which is why they're contacting their local Taxpayer Advocate for help.
And now Congress, facing the 2010 election year and real estate PAC money, is determined to extend the credit. Will the insanity on Capitol Hill never stop?
As I noted last week in Reconfigured home buyer tax credit, isn't loaning people more money than they can repay to get into a house they can't afford what got us into our current economic crisis?
No, I'm not an Enrolled Agent: I've never played on on TV either.
I just wanted to clear that up in case you were confused why I, a non-morning person, was up literally before dawn to drive across town for a meeting.
I was invited. And it's always nice to be asked, especially when you're asked as I was to talk about the Taxpayer Advocacy Panel (TAP).
It was a great session. As you can see from this post, I learned a lot. And I hope the EAs picked up a bit of info on TAP.
If you're interested in learning more about this nationwide volunteer organization that aims to Improve the IRS, check out my previous posts, as well as TAP's Web site, www.improveirs.org.
Welcome Wagon photo courtesy
Torontoist and Toronto LIfe 1969
Janney
Since people become overwhelmed with the fact that they’re buying their first homes, they forget to look at the consequences and weren’t keen to details. Unwanted circumstances then happen. Thanks for sharing this. By the way, I know a real estate coach who could also help many in the real estate industry make money despite the current crisis.
zyra
Right now, there are great opportunities for first time homebuyers and people looking to refinance, but you have to be careful – for each opportunity a bank can afford, there are two or three scams out there. For instance, any mortgage company that contacts you about working the new first time homebuyer tax credit involved- don’t walk, run. If a company offers you hard money loans for a home or refinancing, hang up the phone or delete the e-mail. If you are dealing with something as important as a mortgage stick to the mainstream of lenders and reputable institutions – it will save you from needing major credit repair later.