Apr 3, 2025
- Introduced by the federal government to promote homeownership, the First-Time Homebuyer Credit was a tax benefit.
- Eligible purchasers who bought a house between 2008 and 2010 had access to it.
- Some homeowners, however, must repay the credit depending on the year it was claimed.
Who Must Pay Back the Credit?
- 2008 Homebuyers:
- Received up to $7,500.
- Must repay over 15 years in equal annual payments as an interest-free loan.
- 2009 and 2010 Homebuyers:
- Do not have to repay the credit unless they sell the home or stop using it as a primary residence within 36 months of purchase.
Repaying the Credit
- 2008 recipients repay the credit using Form 1040, Schedule 2, which adds an annual installment to their total tax liability.
- If the house is sold before full repayment, the remaining balance is due in full, unless the home is sold at a loss.
Repayment Exceptions
Homeowners may be exempt from repayment if:
- They sell the home at a loss.
- They experience an involuntary conversion (e.g., a natural disaster damages the home).
- They pass away (their estate is not responsible for repayment).
Examining Your Repayment Situation
- Taxpayers can check their outstanding First-Time Homebuyer Credit balance using the IRS First-Time Homebuyer Credit Account Lookup Tool.
Key Takeaway
- Understanding repayment rules ensures that eligible taxpayers stay compliant and avoid unexpected tax liabilities.
This entry was posted
on Thursday, April 3rd, 2025 at 7:28 pm and is filed under Credits.
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