1st Time Home Owner - Tax Questions

[geniegirl]

Hello, I do a lot of friends and families taxes but this 1st time home owners credit is a new one for me.

I have a relative who got a new house this year the contracted sale price was $65,000 but the gross amount due was $72,000 which included property taxes and settlement charges due to borrower. What amount do I list on the 5405 as the purchase price.

Thanks in advance for your help, I know DISer can help.

 

[Lisa_M]

I would think 65,000.

 

[geniegirl]

thanks thats what i used but i did not want them to miss out on any extra they really could use every cent with the new baby and house.

 

[Topper]

If you are unsure (especially if you are doing taxes for others), then call the IRS directly:

Toll-Free, 1-800-829-1040
Hours of Operation: Monday – Friday, 7:00 a.m. – 10:00 p.m. your local time (Alaska & Hawaii follow Pacific Time).

 

[geniegirl]

Good idea thanks. Everything else I'm good on its just this house credit and the closing papers that make we question what I can give them credit for.

 

[Cheshire Figment]

I have two comments on this.

One is to go over the HUD-1 carefully. You may find some items on it related to property taxes that will affect the itemized deductions.

The other is that the credit is based on the contract sales price plus certain fees and taxes which are shown on the HUD-1.

I would suggest that you start with http://www.irs.gov/newsroom/article/0,,id=204671,00.html and follow some of the links from there for more detailed information. That is much better than getting opinions here.

Mike (CPA Retired)