5. Homebuyer tax credit expanded
The first-time homebuyer's credit was increased to $8,000 in 2009 and is available for purchases made between Jan. 1, 2009, and May 1, 2010. For purchases after Nov. 6, 2009, no credit is allowed if the purchase price exceeds $800,000.
After a recent extension of the credit that kicked in on Nov. 6, those who already own a home are also eligible for a reduced $6,500 tax credit if they buy a home. There are also income limits that phase out the tax credit for higher earners.
If you are claiming this tax credit on your 2009 return, the IRS recently released a new form - Form 5405 - that you must include. The new form requires additional documentation, such as a signed copy of a HUD-1 settlement statement and other documents. The IRS will not begin processing the new forms - which were instituted in order to crack down on fraud - until mid-February, and those who are claiming the credit may see refunds take an additional two to three weeks.