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We are building a home and the finish date for closing was…

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We are building a home...
We are building a home and the finish date for closing was the 30th of this month. It doesn't appear that he will finish in time. If he could obtain the certificate of occupancy even though we haven't "closed" on our loan, can we still get the $6500 tax credit?
Submitted: 8 years ago.Category: Tax
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6/28/2010
Tax Professional: Lev, Tax Advisor replied 8 years ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,360
Experience: Taxes, Immigration, Labor Relations
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A certificate of occupancy is issued by local authorities.

The certificate of occupancy is a statement verifying that a newly constructed building is in compliance with all codes and may be occupied.

 

When you request a certificate of occupancy - a building inspection should be performed and as long as there is no code violations - you may get a certificate of occupancy.

Please see here an example of such request

 

If contraction is not completed and the property is not ready to be occupied - it is unlikely that you may get a certificate of occupancy.

If your contractor will not complete on time due to violation of contract obligations- you generally may sue for damages (including a loss of a tax credit) - please verify your contract.

 

Let me know if you need any help.

 



Edited by LEV on 6/28/2010 at 7:13 PM EST
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Customer reply replied 8 years ago

Ok....but what I am concerned about is "little" things such as some minor trim work, doors, etc.

 

Lets say he can get the certificate of occupancy since he has a great relationship with the city, but the bank will not close until everything is finished.....for tax credit purposes, what form of documentation do I need to submit to get the credit...a settlement of the loan statement OR will the certificate of occupancy suffice to submit for the credit? So I guess what I am asking is....if he can get the occupancy certificate and we have NOT closed on our loan---can we still get the credit?

 

Thanks for your help!!

Tax Professional: Lev, Tax Advisor replied 8 years ago

For tax purposes - it doesn't matter how the house is financed and doesn't matter if you ever have a mortgage.

 

Generally - if you claim the credit on a 2009 (or later) return, you must attach a copy of your settlement statement. For most home buyers, this will be a properly executed Form HUD-1, Settlement Statement (U.S. Department of Housing and Urban Development).

If you are claiming the credit for a newly constructed home and you do not have an executed settlement statement, you should attach a copy of your certificate of occupancy showing the name of the taxpayer, the property address, and the date of the certificate.

A Certificate of Occupancy should be provided to establish the date of occupancy for newly constructed homes,

 

As you are a long-time resident of the same main home and you buy a new home, the law may allow you to claim the homebuyer credit. To qualify, you must have lived in the same main home for at least a five-consecutive-year period during the eight-year period ending on the purchase date of the new home.

You can avoid refund delays by attaching documentation, such as the following, covering the five-consecutive-year period:

  • Forms 1098, Mortgage Interest Statement, or substitute mortgage interest statements,
  • Property tax records, or
  • Homeowner's insurance records.

It is not necessary to have five years of the same documentation. Any combination of these documents that help verify that you owned and lived in your home as a principal residence for at least five consecutive years is acceptable. For example, suppose you owned and lived in your previous home from Nov. 1, 2003, to Oct. 31, 2008. You could send a copy of Form 1098 showing the mortgage interest you paid for the part of 2003 during which you owned and lived in the home, as well as 1098s for 2004, 2005 and 2006, a copy of homeowners insurance records for 2007 and a property tax statement for the part of 2008 during which you owned and lived in the home.

 

In addition, if you purchased the home after April 30, 2010, and you are claiming the credit, you should attach a copy of the pages from a signed binding contract to make a purchase showing all parties' names and signatures, the property address, the purchase price and the date of the contract.

 

Let me know if you need any help.

 

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