Dear Tax Talk,
I was a first-time homebuyer in August 2008 and I took the $7,500 credit when I filed my taxes in 2009. This is to be repaid over 15 years. Is there any way to file an amended return, because six months later they changed the law and not only increased the credit, but they made it so you do not have to repay that amount?
In this case, you should have held out for a better deal and you would have gotten it if you bought in 2009 instead. The first-time homebuyer tax credit expires April 30, unless you're in a binding contract by that date and close by June 30. When the credit was first passed in 2008, the maximum credit was $7,500 and the law treated the amount as an interest-free loan to be repaid as an addition to your tax bill for 15 years. This was not changed by the modification to the credit that expanded it to $8,000, extended the deadline and eliminated the repayment requirement for purchases in 2009 and 2010.
If you received the first-time homebuyer tax credit in 2008, you'll have to start repaying the amount with your 2010 income tax return due by April 15, 2011. The repayment is an addition to your tax bill and is 1/15th of the credit you received. If you received the maximum credit of $7,500, your annual payment will be $500 for tax years 2010 through 2024. The balance of the credit is due sooner if you sell the house.
The IRS provides answers for first-time homebuyers who have claimed or are interested in claiming the credit, and this article explains more of the rules.
To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Taxpayers should seek professional advice based on their particular circumstances.
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