Repaying the First-time Homebuyer Credit

Many taxpayers were able to take advantage of the First-time Homebuyer Credit in 2008, 2009, and 2010. In some cases, however, taxpayers will be required to repay this credit. The IRS will notify taxpayers who claimed the credit concerning their repayment requirements. IRS letters will explain if and when repayment is required. There are different letters for different situations, including a purchase of a home in 2008, in 2009 or 2010, a sale of a main home, or a change in the use of the main home.

If you purchased your home in 2008, you will be required to repay the credit over a period of years. The IRS will send you a notice listing the amount of credit received and the amount due as additional tax each year until the credit is repaid.

If you purchased your home in 2009 or 2010, the IRS will send you a courtesy notice each year for three years after you received the credit. This letter will let you know that if you sell your home, or no longer use it as your main home, within three years of the purchase date, you generally will have to repay the credit.

If you sell or fail to maintain the home as your main home for three years after purchase, you must notify the IRS of the disposition. The IRS matches information from a variety of sources when your home is sold, destroyed, foreclosed on, or no longer your main home, and it checks to determine if the status change has been reported. The IRS will notify you if it has not received the required information to report the sale or other disposition of your home.