Homebuyer Tax Credit Delayed

Now that the first-time homebuyer tax credit has been expanded and extended, there are reports of delays.

Forms not ready

The first hurdle was the delay in the release of the new Form 5405 for people who bought their houses after November 6, 2009. Thankfully, the new form has just come out. Previously, all that had to be done was to file an amendment to the 2008 tax returns. After this, the homebuyer tax refund worth 10% of the house’s purchase price would be on its way. The refund had a maximum of $8,000.

With the new extension until April 30, 2010 and the expansion to include existing homebuyers qualified for a $6,500 refund, processing has slowed down. Filing electronically has also been shut down.

Part of this is due to discoveries of fraudulent claims for the tax credit stimulus. And that’s why it’s now important to have supporting papers filed along with your Form 5405, such as proof of residency, signed mortgage statement and a driver’s license.

Unfortunately, these added security measures will mean a waiting period of three months or more. The delay has already had an impact on some homeowners. For some, they had counted on the homebuyer tax refund as part of their budget to buy new appliances and furniture.

The earlier, the better

So for those who want to take advantage of the homebuyer tax credit, act now, so you can get your refund earlier. Do make sure to take into account that there will be delays with your homebuyer tax credit, and act accordingly.