What this line means
Your annual repayment installment for the first-time homebuyer credit claimed in 2008. Filers who received the 2008 version of the credit (up to $7,500) must repay it in equal installments of $500 per year over 15 years. If you sold the home or it stopped being your main home, the remaining balance is due in the year of the disposition. You calculate the repayment on Form 5405.
Does this apply to you?
- You claimed the first-time homebuyer credit on your 2008 tax return (the version that required repayment)
- You still owe installments on the 2008 credit and have not fully repaid it
- You sold or converted the home for which you claimed the 2008 credit
Easy to overlook
Selling the home triggers full repayment of the remaining balance If you sell the home before the 15-year repayment period ends, you must repay the entire remaining credit balance in the year of the sale. 1 If you claimed the full $7,500 credit in 2008 and have made $500 annual installments through 2025, you still owe the remaining balance. If you sold the home in 2025, the entire unpaid balance is due on your 2025 return. IRS Form 5405 Instructions — Repayment of the First-Time Homebuyer Credit
The 2009-2010 credit does not require repayment unless you sell within 3 years Filers sometimes confuse the 2008 credit (which requires repayment) with the expanded 2009-2010 credit of up to $8,000 (which does not require repayment unless you sold the home within 36 months). 2 If you claimed the credit in 2009 or 2010 and kept the home as your main residence for at least 3 years, you owe nothing on this line. General filing pattern — homebuyer credit repayment forgotten after home sale
Watch out for this
Forgetting the $500 annual installment because it has been years since you claimed the credit. The IRS tracks the 2008 credit repayment on your account and expects $500 each year. If you skip a payment, the IRS adds it to your tax liability and may send a notice. The repayment shows up as an additional tax on your return, not as a bill from the IRS — you must self-report it on Form 5405 each year.
Footnotes
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IRS Form 5405 Instructions, Repayment of the Credit. https://www.irs.gov/instructions/i5405 ↩
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IRS Form 5405 Instructions, Credit Claimed in 2009 or 2010. https://www.irs.gov/instructions/i5405 ↩