The IRS recently clarified the rules for claiming the home buyer tax credit, which Orange County first time home buyers need to be aware of. In 2009, there were many people who fraudulently claimed the tax credit. Congress revised the tax credit in November, extending it until April 30, 2010. At the same time, Congress requested that the IRS come up with new policies to make sure the credit was claimed by people who were eligible to receive it.

Examples of Tax Credit Fraud

In 2009, people were claiming to have bought homes but never did. Also, people who did not qualify as First Time Buyers were claiming the first time buyer $8,000 tax credit.

The first time buyer will need to fully execute IRS Form 5405, which asks for the purchase price, income, and date of the purchase, all important information in relation to the tax credit. The tax credit has income limitations, and is based on 10% of the purchase price, or $8,000, whichever is less. A copy of the final closing statement or HUD-1, needs to be submitted with the tax return.

The tax credit cannot be claimed by filing taxes online. Unfortunately, the return will need to be mailed in, which means it could take between four and eight weeks to receive the check. Still, better late then never.

Time is Running out for Orange County First Time Buyers

Orange County first time buyers who want to take advantage of the $8,000 tax credit need to act quickly. Home buyers have until April 30, 2010, to have a signed contract to purchase a home. They will then have until June 30 to close escrow. With housing inventory levels so low, it is taking some time for home buyers to get an offer accepted. The first step is to talk to an Orange County Loan Expert who is specializes in FHA and VA loans who can walk you through the PreApproval process quickly and easily.