J. William Seabrooke CPA P.C.

Beginning in 2008 Congress provided a tax credit for those taxpayers who purchased a new or existing home for the first time.  This law went through several iterations from 2008-2010 and you may be affected by the provisions of the tax law IF you received the credit in any of these years. You have also probably already received a CPO3A Notice from the Internal Revenue Service. 

You will need to File Form 5405 (“First Time Homebuyer Credit and Repayment of the Credit”) IF you received the credit from your 2008 Federal tax return or if you received the tax credit in 2009-2010 and the home ceased to be your “main home” within three years of the original purchase date:

• 2008 – you received a tax credit associated with the purchase on a new home and you had never previously owned a home.  The maximum credit was $7,500.00.  However, this credit is required to be re-paid to the U.S. Treasury, beginning with your 2010 Federal tax return, at a rate of $500.00 year for 15 years;
• 2009-2010 – for the first ten months of the year the credit increased to a maximum of $8,000.00 but it was only available to first time homebuyers.  Then in November of 2009 Congress extended the tax credit to existing homebuyers and the expiration date.  For existing homebuyers the tax credit credit was equal to 10% of the purchase price of the home, but it was limited to a maximum amount of $6,500.00. There were also maximum adjusted gross income restructions.  The sales contract was required to be signed before May 1, 2010 and the sale was required to be completed by June 30, 2010.   In 2010 the expiration (qualification) date was extended to September 30, 2010. 

1. If you have received a CPO3A Notice (the notice number will appear in the upper right hand corner of the form) from the IRS and are not sure what action is required, follow this link:  http://www.irs.gov/individuals/article/0,,id=227895,00.html
2.  Are any of the following circumstances applicable to your situation?

•  You have sold the home which you purchased in 2009 or 2010 for which you received the tax credit,    OR
•  You are no longer using the home as your “main home”

If so, use this link:  http://www.irs.gov/pub/irs-pdf/i5405.pdf  If needed, Federal Form 5405 can be obtained from this website:  http://www.irs.gov/pub/irs-pdf/f5405.pdf 

 Addtional information on this subject follows: (more…)