Long Delays & Wrongful Rejections with First-Time Home Buyer Tax Credits- What to Do?
Tags: 2010 tax credits, Berkeley Heights NJ, Chatham NJ, Federal tax credits, home buyers, Home Buying, Morris Township, Morristown, New Providence NJ, Randolph, Short Hills, Summit NJ
Did you recently purchase your first home with the expectation of getting a quick $8,000 tax credit, only to wait for months without a response, and then get denied? If so, you are unfortunately one of many.
The IRS has been processing around 150,000 claims per month since early 2009 when they started processing 2008 tax returns for the First-time Homebuyer Credit, so it comes as no surprise that there are long delays and many errors. Processing time is generally taking over six months. And a number of the credit requests from first time homebuyers are getting wrongfully denied. Here are 3 common scenarios of wrongful tax credit rejections, along with suggestions of what to do about it:
1) The IRS rejects the tax credit claim because the first-time homebuyer filer has sent in a 1098 form for mortgage interest paid for real estate that is not their primary residence. Claims are not supposed to be rejected for first-time buyers of a principal residence who previously owned time-shares, vacation property, or even investment property. In this situation, you will need to send an immediate response letter, proving that the mortgage the IRS sees on the 1098 form isn’t on a personal residence. For example, include in the letter copies of rental contracts of where you have been residing for the past three years, an old driver’s license showing that address, and utility bills showing that address.
2) The IRS rejects the tax credit claim because the address of the home purchased has an apartment number. First-time homebuyers of condos, coops, duplexes, mobile homes, and boat slips (yes, even boats can qualify as a principal residence!) are legitimate examples of primary residences that may show an apartment number. In this situation, respond to the rejection with an immediate letter with an explanation of the type of residence purchased, along with proof that you really did purchase a primary residence.
3) The IRS automatically rejects the tax credit claim when the filer has an ITIN (Individual Taxpayer Identification Number) because they do not qualify for a real Social Security number, even if they are not a non-resident alien {The Housing and Economic Recovery Act of 2008 does exclude nonresident aliens.} Holders of ITIN numbers can technically be ‘Resident Aliens’, who may qualify for the first time home buyer tax credit, IF they have a green card AND they meet the “substantial presence test” (they have been present in the US at least 31 days during the current year, as well as 183 days during the 3-year period comprised of the current year and the previous two years). In this situation, as a Resident Alien’, you will need to send copy of your green card and prove the time that you have been living in the United States.
According to Eva Rosenberg, publisher of TaxMama.com, if you have not yet heard back from the IRS, it is a good idea to call the IRS to confirm that someone has received your file, and also to make sure that they have your correct new address for correspondence (to avoid delays that can cause you to miss response deadlines), because they may be sending notices to your previous residence. For more information on this subject, check out this article: http://bit.ly/biNbXC .
To see how local New Jersey Real Estate markets are faring now that the deadline is past to get a tax credit for a home purchase, go to www.NJMarketTrends.com for current local market data in the New Jersey towns of Summit, New Providence, Berkeley Heights, Millburn/Short Hills, the Chathams, Madison, Randolph, Morristown and Morris Township.
If you or someone you know (friends, family, coworkers, neighbors) is looking to buy or sell a home in Summit New Jersey or in the surrounding areas, AND would like honest, reliable, and tech-savvy service, contact Judi for a free, no obligation consultation.
Judith “Judi” Paris, Broker/Sales Associate
Coldwell Banker Realtors- Summit, NJ
(O) 908-522-3631 (C) 973-902-HOME
Visit me at: www.BestHomeResults.com
Follow me on Twitter: @JudiParis
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One Response to 'Long Delays & Wrongful Rejections with First-Time Home Buyer Tax Credits- What to Do?'
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on August 1, 2010 on 4:36 PM
The IRS sent me the common used delay letter(wrench) stating that I was not eligible because they didn’t have my correct address, AFTER I moved into the house I bought and AFTER I had closed on it and claimed the rebate.
Best way with them is to snail mail certified, return receipt requested with each of their denials.
Better, get a TAS agent on your case early; still expect a wait and the IRS Where’s My Refund? site still displaying the same error codes.
They are well over six months delaying my claim and owe me interest for their errors,delay letter excuses AFTER I sent them FULL documentation SEVERAL times.