What this line means
The amount of the first-time homebuyer credit you originally claimed on your 2008 tax return. The maximum credit was $7,500 for purchases made between April 9, 2008, and December 31, 2008. This credit functioned as an interest-free loan from the IRS, not a grant — you repay it in 15 equal annual installments of $500 per year (for the full $7,500 credit).
Does this apply to you?
- You claimed the first-time homebuyer credit on your 2008 tax return
- You purchased a primary residence between April 9, 2008, and December 31, 2008
- You are still repaying the credit in annual installments
- You received a credit of up to $7,500 that must be repaid over 15 years
Easy to overlook
Only the 2008 credit requires repayment — 2009 and 2010 credits do not Congress expanded the first-time homebuyer credit for purchases in 2009 and 2010, increasing the maximum to $8,000 and eliminating the repayment requirement (for homes not sold within 36 months). If you claimed the credit for a home purchased in 2009 or 2010 and still own it, you owe nothing. Only the original 2008 version requires annual repayment. 1 IRS Notice 2008-106 — First-Time Homebuyer Credit
The original credit amount determines every future calculation Line 1 is the anchor for the entire form. Your annual installment (line 4), remaining balance (line 3), and accelerated repayment on sale (line 7) all derive from this number. If you claimed less than $7,500 (because the purchase price or your tax liability was lower), your annual installment is 1/15 of the actual credit claimed, not $500. 2 IRS Form 5405 instructions — Line 1
Watch out for this
Confusing the 2008 credit with the 2009-2010 credit and skipping the repayment. The IRS tracks which year’s credit you claimed. If you bought in 2008 and claimed the credit, repayment is mandatory regardless of whether you still own the home. Failing to include the annual installment on your tax return triggers an IRS notice and interest charges on the unpaid amount.
Footnotes
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IRS Notice 2008-106, First-Time Homebuyer Credit. https://www.irs.gov/newsroom/first-time-homebuyer-credit-questions-and-answers ↩
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IRS Form 5405 Instructions, Line 1. https://www.irs.gov/instructions/i5405 ↩