Individuals who purchased a home in 2008 and took advantage of the First Time Homebuyer Tax Credit—keep reading. I consulted with Ryan L. Ross, CPA at the Leawood Office Business Center in Leawood, Kansas. He provided some insight into what you need to know as a seller who purchased their home in 2008 and claimed a credit.
First, for all homes purchased in 2008, the First-Time Homebuyer Credit is repaid over 15 years or sooner if the home is sold or ceased to be the taxpayer’s main home. For homes purchased after December 31, 2008, the credit must be repaid only if the home is sold or ceases to be the taxpayer’s main home within 36 months of the date of purchase.
Other things to note: Form 5405, Repayment of the First-Time Homebuyer Credit, must be filed for the year the home is sold or ceases to be the taxpayer’s main home.
Be sure to look into exceptions to this repayment rule, too. These exceptions include:
- The repayment is limited to the gain on the sale of the home. Gain is typically computed by subtracting the original cost and improvements from the sales price;
- The home is destroyed or condemned, and a new home is purchased;
- Extended duty of military personnel or intelligence officials;
- Death of the taxpayer.
For more information, consult your tax advisor or contact me to get in touch with someone who can help.