One of my past clients let me know of this after she read an article on MSN. (Thank you for the information and link!)
The reason for this restriction is that unfortunately there were many suspicious claims last year, and the government is trying to curtail tax fraud. There is also an additional form and a decent amount of supporting paperwork that needs to be sent in to prove eligibility for the credit.
The additional paperwork First Time Homebuyers claiming the credit need:
For purchasers of conventional homes, a copy of Form HUD-1, Settlement Statement, or other settlement statement, showing all parties’ names and signatures, property address, sales price and date of purchase.
For purchasers of mobile homes who are unable to get a settlement statement, a copy of the executed retail sales contract showing all parties’ names and signatures, property address, purchase price and date of purchase.
For a newly constructed home where a settlement statement is not available, a copy of the certificate of occupancy showing the owner’s name, property address and date of the certificate.
For those long time homeowners who moved and qualify for the $6,500 credit, this is the additional paperwork they will need to submit:
Form 1098, Mortgage Interest Statement, or substitute mortgage interest statements,
Property tax records or
Homeowner’s insurance records.
The good news is that homebuyers who are going to claim the credit can still use the electronic tax preparation programs they would to e-file, but instead of clicking a button to submit, they will need to print it, attach the supporting documents, and mail!
(All in all, the few extra steps and the longer time it will take are worth the up to $6,500 or $8,000 credit that the filer will receive!)