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Anti-Fraud Provisions Included in Tax Credit Extension
The Worker, Homeownership and Business Act of 2009 — legislation that was signed into law last month by President Obama to extend the home buyer tax credit and make it available to a broader range of potential buyers — includes new provisions supported by NAHB aimed at preventing the credit from being used fraudulently.
“The home buyer tax credit has already proven to be a successful policy that has benefitted more than 1.4 million entry-level buyers and helped to mitigate the foreclosure crisis,” said NAHB Chairman Joe Robson. “We are very pleased that the new law includes important safeguards to prevent abuse while extending and enhancing this critical program that will spur job growth and provide a much-needed boost to the housing market and overall economy.”
The new law extends the $8,000 credit for first-time home buyers for sales contracts entered into by April 30, 2010 and closed on by June 30. It has been expanded to include a new $6,500 credit for owners of existing homes who are purchasing a new principal residence. Existing home owners can claim the $6,500 tax credit if they have been residing in their principal residence for five consecutive years out of the last eight.
NAHB estimates that the extended and expanded home buyer tax credit will generate 180,000 additional sales; and create 211,000 jobs, $9.6 billion in wage income, $7.2 billion in small and corporate business income, $5 billion in federal taxes and $1.9 billion in state and local taxes.
In order to claim the home buyer tax credit, home buyers must complete a HUD-1 form or provide other proof of a settlement closing to show that the claim is for the purchase of a completed principal residence. NAHB has provided recommendations to the Department of Treasury on alternative proof of settlement in cases where a HUD-1 form is not used. The IRS is expected to have additional information soon.
Further, no taxpayer under the age of 18, unless they are married to someone over 18, may claim the tax credit and no taxpayer can claim the credit if they are named as a dependent on someone else’s tax return.
The law also gives the IRS increased authority to use previously filed income tax return information to catch tax cheats.
NAHB has supported IRS efforts to better administer the program and association staff members have met with Treasury and IRS officials to seek additional guidance on rules needing further clarification. For example, it is unclear if a couple is eligible to take the $6,500 repeat home buyer tax credit if only one spouse has lived in a home for five consecutive years out of the last eight.
For complete details on the home buyer tax credit, including FAQ sections on the $8,000 first-time credit and $6,500 repeat credit, log on to NAHB’s consumer-oriented Web site at www.federalhousingtaxcredit.com.
For further information, e-mail Greg Brown at NAHB, or call him at 800-368-5242 x8421, or contact Robert Dietz, x8285.
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