Tool for Repaying Home Buyer Tax Credit

To help 2008 and other borrowers who have to pay back the proceeds of that credit, the IRS today released a “tool” to help make that process easier, the First-Time home buyer Credit Lookup Tool.

The tool simplifies the gathering of information you need to include the proper pay-back amount in your federal tax filing:

  • Balance of your first-time home buyer credit
  • Amount paid back to date
  • Total amount of the credit received
  • Annual installment repayment amount

You will need to insert your Social Security number, date of birth, and some other identifying information to use the tool.

In 2008, the First Time Home Buyer tax credit was structured as a no interest loan that required repayment.

In 2009 or 2010, the First Time Home Buyer tax credit does not require repayment if the person who received the credit keeps the property for at least three (3) years.  However, selling in less than three (3) years requires repayment of that entire tax credit. It is an “all or nothing” proposition. The repayment requirement is not prorated on the length of ownership. There are a few exceptions to this repayment requirement: death of the homeowner, sale due to a divorce settlement, and “involuntary conversion” (catastrophic loss, such as fire, taking by eminent domain, etc.)
You can get more on the rules and the new look-up tool from the IRS.

Access IRS Form 5405.

Access instructions for IRS Form 5405.

About JoeShaver

Realtor at RE/MAX Realty Centre, Inc.

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