• IRS Tool Calculates What You Owe on First-Time Home Buyer Tax Credit

    A new online tool helps home owners who used the 2008 first-time home buyer tax credit calculate how much they now have to pay back. 

    If you bought a home in 2008 and took advantage of the original first-time home buyer tax credit in 2008, you have to pay it back. The credit was a no-interest loan, and you repay it in equal installments over 15 years through your tax return.

    If you claimed the tax credit in 2009, 2010, or 2011 and then sold your house within 36 months, you’ll also have to pay back the credit when you next pay your federal taxes. Also, anyone who sold their home, or stopped using it as their main home, may have to repay the entire credit whether their home was purchased in 2008, 2009, or 2010. If you took advantage of a later version of the tax credit and stayed put, you don’t have to repay it.

    To make it easier to calculate how much you have to pay back, the Internal Revenue Service developed an online tool, which tells you:

    • The original amount of the tax credit you got
    • How much of the tax credit you’ve already paid back
    • How much you still owe
    • How much you’re going to owe in future years (your annual installment repayment amount)

    All you need to use the tool is your Social Security number, date of birth, your street address, and Zip code.

    Enter the information you get from the online tool into line 59b of Form 1040 or line 58b of Form 1040NR. You don’t need to attach Form 5405, the First-Time Homebuyer Credit and Repayment of the Credit, to your return unless you’re repaying the credit because the home stopped being your main home.


    First-time home buyer tax credit complications

    In some cases, calculating your tax credit repayment is complicated — say your property has a separate building that you use for a business, your spouse dies, you converted your home to a rental property, or your home is destroyed or condemned — so check the rules on your repayment situation. You may also need to consult an earlier version of the form


Visit houselogic.com for more articles like this.