The requirements to qualify for and receive the new homebuyer credit has been a “work-in-progress” provision of the Federal tax regulations for many months. Initially promulgated via the Housing and Economic Recovery Act of 2008 the law provided for a new refundable tax credit for individuals who were qualified first-time homebuyers of a principal residence in the United States. For 2008, the credit applied to the purchase of a principal residence which was purchased after April 8, 2008, and on or before December 31, 2008. It provided qualified taxpayers with a one-time tax credit in the year of purchase.  However, the law required that the credit be repaid over a 15-year period. It was in essence an interest free loan.
In 2009 the law was changed to provide for the tax credit with no re-payment requirement. However, it was still limited to first time homebuyers. It was due to expire on November 30, 2009. Then on November 6th Congress and the President extended the provisions of the law  in to 2010 to include a home purchased after November 6th and on contract on or before April 30, 2010. The actual closing must occur on or before June 30, 2010. The credit is claimed using Form 5405 which is filed along with the individual tax return. That form was recently revised by the Internal Revenue Service but the documentation requirements are significantly more stringent. However, several written documents must be included with the tax return and the Form 5405. Taxpayers also can not file their tax returns electronically, and must paper file. This requirement not only extends the time frame for the receipt of a tax refund, it also increases the risk that an administration processing error may occur or that tax returns may be questioned by the IRS. Instructions for the completion of the Form 5405 and the associated required supporting documentation can be found on the IRS website (http://www.irs.gov)   Here is the information that was provided by the IRS today: