Posts Tagged ‘First time homebuyer credit’

Did You Receive A “First Time Home Buyer Tax Credit” in 2008??

Thursday, February 2nd, 2012

The exclusive purpose for the information which is provided from this website is to disseminate  information, and not to provide tax advice.

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 ( ).  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. 

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…)

2010 Tax Law Changes (Summary)

Tuesday, February 15th, 2011

Important Tax Law Changes for 2010

Taxpayers should make sure they are aware of many important changes to the tax law before they complete their 2010 federal income tax return.

Here are several important changes that the IRS wants you to keep in mind when you file your 2010 federal income tax return in 2011.

Health Insurance Deduction Reduces Self Employment Tax  In 2010, eligible self-employed individuals can use the self-employed health insurance deduction to reduce their social security self-employment tax liability in addition to their income tax liability. As in the past, eligible taxpayers claim this deduction on Form 1040 Line 29. But in 2010, eligible taxpayers can also enter this amount on Schedule SE Line 3, thus reducing net earnings from self-employment subject to the 15.3 percent social security self-employment tax.

Premiums paid for health insurance covering the taxpayer, spouse and dependents generally qualify for this deduction. Premiums paid for coverage of an adult child under age 27 at the end of the year, for the time period beginning on or after March 30, 2010, also qualify for this deduction, even if the child is not the taxpayer’s dependent.

As before, the insurance plan must be set up under the taxpayer’s business, and the taxpayer cannot be eligible to participate in an employer-sponsored health plan. Details, including a worksheet, are in the instructions to Form 1040.

First-time homebuyer credit You must meet the required deadlines to be eligible to claim the credit.  You must have bought — or entered into a binding contract to buy — a principal residence on or before April 30, 2010. If you entered into a binding contract by April 30, 2010, you must have closed or gone to settlement on the home on or before Sept. 30, 2010.   Because of the documentation requirements for claiming the credit, taxpayers who claim the credit on their 2010 tax return must file a paper — not electronic — return and attach Form 5405, First-Time Homebuyer Credit and Repayment of the Credit, and a properly executed copy of a settlement statement used to complete the purchase.

Taxpayers who claimed the first-time homebuyer credit for a home bought in 2008 must generally begin repaying it on the 2010 return. In most cases, the credit must be repaid over a 15-year period. Many of those affected by this requirement received reminder letters from the IRS.

A repayment requirement also applies to a taxpayer who claimed the credit on either their 2008 or 2009 return and then sold it or stopped using the home as their main home in 2010. Use Form 5405 to report the repayment.

In addition, certain members of the armed forces and some other taxpayers still have time to buy a home and take the credit. See Form 5405 and its instructions for details.

Standard Mileage Rates for 2010 The standard mileage rate for business use of a car, van, pick-up or panel truck is 50 cents for each mile driven. The rate for the cost of operating a vehicle for medical reasons or as part of a deductible move is 16.5 cents per mile. The rate for using a car to provide services to charitable organizations is set by law and remains at 14 cents a mile.

Tax Breaks Extended Several tax breaks that expired at the end of 2009 were renewed and can be claimed on 2010 returns. They include:

  • State and local general sales tax deduction, primarily benefiting people living in areas without state and local income taxes. Claim on Schedule A, Line 5.
  • Higher education tuition and fees deduction benefiting parents and students. Claim on Form 8917.
  • Educator expense deduction for kindergarten through grade 12 educators with out-of-pocket classroom expenses of up to $250, Claim on Form 1040, Line 23 or Form 1040A Line 16.
  • District of Columbia first-time homebuyer credit. Claim on Form 8859

For further information about these changes visit the IRS website at or call 1-(800) 829-1040.

First Time Home Buyer Credit Repayment

Tuesday, February 8th, 2011

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:,,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:  If needed, Federal Form 5405 can be obtained from this website: 

 Addtional information on this subject follows: (more…)

IRS Provides Guidance & Procedures for New Homebuyer Credit

Friday, January 15th, 2010

The requirements to qualify for and receive the new homebuyer credit has been a “work-in-progress” provision of the Federal tax regulations for many months.  Initially promulgated via the  Housing and Economic Recovery Act of 2008 the law provided for a new refundable tax credit for individuals who were qualified first-time homebuyers of a principal residence in the United States. For 2008, the credit applied to the purchase of a principal residence which was purchased after April 8, 2008, and on or before December 31, 2008.  It provided qualified taxpayers with a one-time tax credit in the year of purchase.   However, the law required that the credit be repaid over a 15-year period.  It was in essence an interest free loan.

In 2009 the law was changed to provide for the tax credit with no re-payment requirement.  However, it was still limited to first time homebuyers.  It was due to expire on November 30, 2009.  Then on November 6th Congress and the President extended the provisions of the law  in to 2010 to include a home purchased after November 6th and on contract on or before April 30, 2010.  The actual closing must occur on or before June 30, 2010.  The credit is claimed using Form 5405 which is filed along with the individual tax return.  That form was recently revised by the Internal Revenue Service but the documentation requirements are significantly more stringent.  However, several written documents must be included with the tax return and the Form 5405. Taxpayers also can not file their tax returns electronically, and must paper file.  This requirement not only extends the time frame for the receipt of a tax refund, it also increases the risk that an administration processing error may occur or that tax returns may be questioned by the IRS.  Instructions for the completion of the Form 5405 and the associated required supporting documentation can be found on the IRS website (   Here is the information that was provided by the IRS today: