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 that the IRS has provided – 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.
For qualifying purchases made after 2008, the repayment is waived.
However, if you dispose of your home that you purchased in 2008, or you stop using it as a principal residence during the 15-year repayment period, the credit repayment is accelerated.
On the other hand, for homes purchased after 2008 for which you received the credit, if you dispose of it or you stop using it as a principal residence within 36 months from the purchase date, the credit repayment is accelerated.
This means you must increase your federal income tax for the year of disposition or cessation of use by the amount of any excess of the credit allowed over the sum of the additional taxes paid under the credit repayment requirement.
Click here for the exceptions located directly on the IRS site.
