My first 8000 Tax Credit post has received overwhelming interest. Thank you for all of you feedback and questions -- I have been reading government and state site to find accurate information -- not opinions.
How to use the tax credit prior to closing? Unfortunately the news is not wonderful!!
- Hud writes very confusing and very general statement --typical of a governmental office
- HUD needs to be general since many of the programs are a state by state not national
- Please click the PDF link below to read HUD's statement from May 29th, 2009
New Facts
- FHA still requires that the 3.5% be the Buyers money.
- HUD stated Tax Credit Money can be used as additional down payment funds.
- Hud stated it can be used to assist with closing costs
- It is can be considered additional financing, a soft second or loan.
- It is not an advance with no strings
- If buyer owes taxes, child support or is garnished they may not recieve all $8000.
- Re-file your taxes with Amendment and receive Tax Credit early
- IF you filed Tax Extension - close and include Form 5405 you can receive money early.
The nutshell is HUD implied that the money can be used in advance to closing but the IRS does not stipulate how to use it - and parts of www.IRS.org flat out says NO.
The best site I have found is the National Council of State Housing Agencies (NCSHA). There is tons of information in plain english. Save this site http://www.ncsha.org/
Most importantly the NCSHA site details exactly what the American Recovery and Reinvestment Act of 2009 is and provides links to state based programs to help buyers. I am disappointed that North Carolina was not listed.
The Bad NEWS:
Based on what I have read. -- There is no concrete or official process to use the Tax Credit money prior to closing in North Carolina nor have I found a state that is regularly provides this to Buyers. My biggest concern is the IRS site flat out states "The credit may not be claimed before the closing date". The IRS provides no directions, exceptions or situations to use the Tax Credit prior to closing.
Read Form 5405which is used to file for the $8000 Tax Credit. This form is mentioned numerous times in HUD's statement. Form 5405 is very specific and nowhere does explain how to use it prior to closing. Below is the First Time Home Buyer Section of the www.IRS.gov. This morning I email customer service at the IRS to be told how to do this-- I tried to call but could not wait that long.
Definitely another link to save. http://www.irs.gov/newsroom/article/0,,id=204671,00.html?portlet7.
Jennifer Marks
