Homes Purchased in 2008
First Time Home Buyer Credit Questions and Answers: Homes Purchased in 2008
Q. How is the credit repaid on a 2008 home purchase?
A. The first-time home buyer credit will be recaptured on Form 1040 as additional tax and is repaid in 15 equal annual installments beginning in the second tax year after the year in which the credit is claimed.
Q. When must I pay back the credit for the home I purchased in 2008?
A. For homes purchased in 2008, the first-time home buyer credit is similar to a 15-year interest-free loan. You must begin repaying the loan the second year after claiming the credit. It is repaid in 15 equal annual installments beginning with the second tax year after the year the credit is claimed.
For example, if you properly claim the maximum available credit of $7,500 on your 2008 federal tax return, you must begin repaying the credit by including one-fifteenth of this amount, or $500, as an additional tax on your 2010 federal tax return. Normally, $500 will be due each year from 2010 to 2024.
There are a number of exceptions that apply to the repayment rule. Please see Form 5405 and its instructions; review the first-time home buyer credit section of Publication 17, Your Federal Income Tax for Individuals; or consult your tax professional.
Q. For homes purchased in 2008, how will the IRS know if someone sells their residence before the 15 years are up?
A. Through both self reporting and third-party information.
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