Repayment of First Time Homebuyer Credit

If you claimed the First Time Homebuyer credit for a home purchased in 2008 and the home remained your main home during 2010, you are required to begin repaying the credit in equal payments over 15 years with no interest charges starting with your 2010 tax return. This is similar to a 15-year interest-free loan. The minimum payment for the 2010 tax return is 1/15 of the original credit received. You may need to adjust your withholding or make quarterly estimated tax payments to ensure that you are not under-withheld during your repayment periods.

 

To repay the credit, you must attach a completed Form 5405 to your tax return beginning with the 2010 tax year. If the home stops being your main home, you may need to add the entire remaining unpaid credit amount to your income tax on your next tax return. The IRS calls this an “acceleration of recapture”. However, there are certain exceptions where you may not have to repay the full credit.

 

For more information and resources on the repayment of the credit and exceptions, see the instructions for Form 5405, First-Time Homebuyer Credit and Repayment of the Credit or contact your local income tax preparation office for assistance.

 

Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.

Posted To: Ramblin Randall By: Ramblin Randall On: Thursday, March 10, 2011
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