Do you want to know first-time homebuyer credit repayment lookup? Then you are on the right page keep reading.
The first-time homebuyer tax credit ended in 2010, at least for most taxpayers, but it still applies to those who purchased homes from 2008 to 2010.
Moreover, taxpayers that took the credit on their federal income tax returns in 2007 are obligated to repay it over 15 years beginning with their 2010 tax returns. It will have to make payments until 2025.
However, the credit has fully refundable. Eligible taxpayers were able to obtain an additional federal tax refund of $7,500 in 2008, even if they had no other tax liabilities.
Also, it was an advantage credit I need, but those that took the credit in that one year will have to repay it.
READ MORE: First-Time Homebuyer Credit Account Look-up
The History of The First-Time Homebuyer Credit Repayment
The credit worth is $7,500 for homes bought in 2008 or $3,750 for kart9ed individuals that filed separate returns.
Moreover, it increased to a $8,000 limit for times purchased from January through November of 2009, and to $4,000 for married couples filing separately.
Congress acted to give a reduced credit of $6,500 to long-term residents who were buying their homes, more or less simultaneously renewing the credit for those five months from 2009 to 2010.
The limit was $3,250 for married couples that filed separate returns. The effective period of the credit lasted from November 7, 2009, through April 2010. It doesn’t require repayment for the credit.
Those serving in the United States military, the intelligence community Foreign Service on official extended duty outside the U.S. for an additional year to qualify for the homebuyer credit.
What Is a Primary Residence?
The tax credit applied to primary residences only. A primary residence is one where you lived most of the time. It can be a house a cooperative apartment, a mobile home or a houseboat.
The tax credit was designed for those purchasing a primary residence, taxpayers can qualify even if they otherwise owned a vacation home or rental property, provide that those properties were not their primary residences for at least three years preceding the purchase of their new residences.
How To Calculate Tax Credit and Other Rules
The tax credit was equal to 10% of the purchase price of your home. No tax credit was allowed when the purchase price of the home exceeded $800,000.
Moreover, a first-time homebuyer was defined as someone that didn’t own a primary residence in the three-year period that ended on the date of purchase of the home.
Married couples can consider first-time buyers if neither spouse owned the residence in the previous three years. They were disqualified if one of them did.
Long-term residents were defined as those that owned and lived in their residences for at least five good years in an eight-year period that ended on the purchase date of the new property.
Income Phase-Out Range
The credit was first phased out for individuals with modified adjusted gross incomes (MAGIs) of between $75,000 and $95,000.
Moreover, the phase-out was $150,000 to $170,000 for married couples filing joint returns. Then, effective November 6, 2009, the phase-out ranges started at $125,000 or $225,000 for married couples.
READ MORE: The First-Time Homebuyer Tax Credit
First-Time Homebuyer Credit Repayment
The homebuyer credit is repaid as an additional tax on your federal tax return if you buy your home and qualified in 2008.
Moreover, it must be repaid at the rate of ⅔% or 1/15 of your credit amount. It works out annual repayment of $500 yearly when you received the maximum $7,500 credit. Think of it like an interest-free 15-year loan.
However, repaying the credit requires filling out a tax return even if you wouldn’t otherwise be required to do so. The payment entered on line 10 of Schedule 2 for the 2021 tax year, the return you will file in the year 2022.
When To Repay in Full
The credit has to be repaid in full, in one lump sum equal to the balance, if you sell the home that was purchased in 2008 at any time within the 15-year repayment period.
Moreover, it involves preparing and filing Form 5405 which will calculate how much you owe. The Internal Revenue Service gives instructions for completing the form on its website.
Calculating the repayment in the event of foreclosure will be complicated, so you will want to seek the help of a tax professional.
Then you can then report the repayment amount on Form 1040. You don’t have to file Form 5405 if you make an installment payment.
Furthermore, the surviving spouse is responsible for only one-half of the repayment balance if you and your spouse bought the home and claimed the credit together.
READ MORE: Mortgage Options For First Time Student Homebuyers
Conclusion
First-time homebuyer credit repayment of the credit is a tax form that is distributed by the Internal Revenue Service (IRS). The taxpayer used to claim the tax credit for the percentage of the purchase price of the new home.
