The real estate market has been pumped up nicely with the up to $8,000 first-time buyer tax credit, Las Vegas definitely being one of the beneficiaries. Many renters go for it here and acquire good homes that have become very affordable during the prolonged housing and mortgage slump. The program runs through November, 2009, so those thinking about it should get their ducks in a row pretty soon.
To claim the credit is relatively simple, basically requiring the filling-out of form 5405, sending it in and the qualified money should be coming within a couple of months. That and as it goes with any program anyway, there are always going to be abusers. Some borrowers think that they can get away with falsifying applications and collect some undue cash in the process.
IRS, however, is keeping a keen eye on this, using smart computer screening software to catch fraudulent filings. It has a few dozen criminal investigations under way around the country right now, involving individual mortgage borrowers and tax preparers.
Some of the key abused or misunderstood categories that will negate an application are:
- Purchasing a property when one spouse is ineligible.
- Buying a home from a "related person", like parents, children, grandparents, grandkids and spouse or from a corporation or partnership where the borrower holds over 50% ownership.
- Becoming a homeowner via an inheritance or gift.
- Earning too much money - over $95,000 for singles and $170,000 for married couples filing jointly.
- Funding the purchase with a tax exempt bond program.
It's better to know in advance whether the borrower qualifies or not. It's generally not much fun to be subject to lengthy IRS audits and potential penalties.