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IRS.gov Website
Rev. date: 12/02/2013


Repayment of the First-time Homebuyer Credit

Tax Topic 611
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Repayment of the Credit
Repayment rules for 2008 purchases. For qualifying home purchases after April 8, 2008, and before January 1, 2009, the first-time homebuyer credit is repaid ratably over 15 years, with no interest charge. If a first-time homebuyer credit was allowed to a taxpayer, the taxpayer's income tax increases by 6⅔% of the amount of such credit for each taxable year in the 15-year repayment period. The repayment period began with the second taxable year following the year of purchase for which the credit was taken.
Repayment rules for post-2008 purchases. For qualifying purchases made after 2008, the general repayment requirement of the first-time homebuyer credit is waived. However, the accelerated repayment rule applies if the taxpayer disposes of the home, or the taxpayer (and the taxpayer’s spouse, if married) ceases to use the home as a principal residence during the 36 months after the purchase of the residence. The entire credit must be repaid on the return for the year in which the sale occurs or the use as a principal residence ceases.
Exceptions to the repayment. In the case of a sale of the principal residence to an unrelated person, the increase in tax due to accelerated repayment is limited to the amount of gain (if any) on such sale. For purposes of calculating gain, the adjusted basis of such residence shall be reduced by the amount of the first-time homebuyer credit allowed, to the extent not previously repaid. In the case of an involuntary conversion, repayment is not accelerated if a new principal residence is acquired within a 2-year period. No amount must be repaid after the death of the taxpayer.


Repaying the Credit

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The credit is generally repaid on Form 5405, Repayment of the First-Time Homebuyer Credit, and attached to your Form 1040 for the appropriate tax year. However, if you bought your home in 2008 and owned and used it as your main home for all of 2013, you can enter your 2013 annual installment repayment amount on your Form 1040, line 59b, without attaching form 5405. For more information, see First-Time Homebuyer Credit Questions and Answers: Repaying the Credit.


More Information

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For more detailed information on the first-time homebuyer credit, refer to the Instructions 5405 (PDF), the First-Time Homebuyer Credit: Questions and Answers, and additional topics on this subject, on the IRS website at www.irs.gov.