Repaying First-Time Homebuyer Credit

Remember that $8,000 first-time home buyer tax credit?  Those who claimed it in 2008 have 15 years to repay it.

The IRS no longer sends out reminder letters to taxpayers about how much they owe.  A new online tool can help you figure out the amount due on your tax bill if you took the credit.

When the housing market was at its lowest, the first-time homebuyer credit helped spur sales. In 2008, taxpayers got an $8,000 credit to entice them to buy. 

"It was an interest-free loan originally and later on, it changed in 2009 to a $7,500 credit you didn't have to pay back," Karen Connelly of the IRS said.

But for 2008 buyers, repayments started in 2010.   While the IRS won't remind you about the repayment every year, you can use an online tool to calculate how much has been paid and the remaining balance.

"They have to enter some information like their address, Social Security number, date of birth, I believe, and it will show them what they owe.  If they're married, they have to have their spouse do it as well because that's how the first-time homebuyer tax credit is; it's split between spouses," Connelly said.

To repay the credit, you add the amount of this year's payment to any other tax you owe on your federal return.  You could get a smaller refund or even end up owing the IRS.

There are some people who must repay their first-time homebuyer credit, even if they bought it after 2008.  If you sold the home or stopped using it as your main home, you have three years from the date of purchase to repay the entire credit. 

Just this week, the IRS announced that it finally has all forms available for everyone to file their taxes.  There was a holdup in forms because of late changes to the tax code.  We are just six weeks away from the April 15 deadline.

Visit the IRS website.