WASHINGTON -- If you're thinking about applying for the new $6,500 homebuyer federal tax credit or the extended $8,000 version, here's some news: The IRS has just issued its first formal guidelines for you.
Tops on the agency's list of advice: Cool it for a couple of weeks. Even if you qualify for one of the credits, don't send in any requests to the IRS quite yet. Wait until later this month when the agency publishes its revised Form 5405 with all the key instructions needed to get you a check from the government.
The forthcoming version of the form will incorporate the major changes to the tax credit program made by Congress in legislation signed by President Obama on Nov. 6. These include expanded income limits, a cap on home prices, additional documentation requirements and prohibitions against claims by dependents, among others.
In a tax bulletin issued just before Thanksgiving, the IRS emphasized that all home purchasers after Nov. 6 "must use this new version (of Form 5405) to claim the credit." Put another way: If you send in the old version -- which happens to be the one you can currently download from the agency's Web site, www.irs.gov -- your request for the credit is likely to go nowhere.
The legislation -- known as the Worker, Homeownership and Business Assistance Act of 2009 -- extended the $8,000 first-time home purchaser credit until April 30, 2010, for signed contracts, and June 30, 2010, for closings. The law also created a new tax credit for people who've owned a principal residence for a consecutive five of the previous eight years, and who purchase a replacement principal residence with a signed contract no later than next April 30, followed by a closing no later than June 30.
Qualified repeat buyers can obtain credits up to $6,500. For both the first-time and repeat buyer program, the credit is equal to 10 percent of the purchase price of the house, up to a maximum of either $6,500 or $8,000.
The new IRS bulletin also outlined the agency's guidance on other important features of the amended credit program:
-- Members of the armed forces, plus diplomatic and intelligence personnel who are in service in foreign countries, will get an extra year to buy a principal residence and still qualify for a credit. They will have until April 30, 2011, to enter into a binding contract to purchase a house, and until June 30, 2011, to close on it.