If you purchased a qualifying home between April 9, 2008 and December 31, 2008, you must repay the credit over 15 years. In order to repay the credit, you must have had to increase your federal income taxes by 1/15 the amount of the credit for each tax year.
Here is an example the IRS provided – If you were allowed a $7,500 first-time homebuyer credit for 2008, you must repay the credit. Your 15-year repayment period started with 2010, the second taxable year from 2008. To repay the credit, you must add $500 (which is 1/15 of $7,500) to your federal income tax for each taxable year in the repayment period.
The repayment is waived for qualifying purchases made after 2008.
However, if you dispose of your home purchased in 2008, or you stop using it as a principal residence during the 15-year repayment period, the credit repayment is accelerated.
Additionally, if you bought a home after 2008 and received the first-time homebuyer tax credit, you must repay the entire credit amount if you sell the home or stop living in it as your primary residence within 36 months (or three years) of purchase
This accelerated repayment means you have to pay more federal income tax for the year of disposition or cessation of use depending on any excess of the credit allowed above the total additional taxes paid under the credit repayment obligation.
Use your IRS online account to check your repayment obligation, or contact the IRS directly at 1-800-829-1040, Monday – Friday, 7am-7pm.
Click here for the exceptions located directly on the IRS site.
