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This provision of the Federal tax laws went through several iterations from 2008-2011. A very extensive article on this same subject was published on February 8, 2011 (http://www.billseabrookecpa.com/blog/?p=617 ). In a nutshell, if you purchased a qualifying personal residence in 2008 and received this tax credit, it was a loan from the Federal government which has to be re-paid in 15 equal installments. The first installment was due and payable in tax year 2010.  You were also required to complete Federal Form 5405 (“First-Time Homebuyer Credit and Repayment of the Credit”) and attach it to your Federal tax return.Â
The tax credit itself carried a requirement that you continued to reside in that home.  Anyone who sold their home, or stopped using it as their main home, may also have to repay the entire credit whether their home was purchased in 2008, 2009 or 2010.  The instructions for Federal Form 5405 should answer all of your questions. If not, contact the Internal Revenue Service at (800) 829-1040. (more…)