Federal First Time Homebuyer Credit Extension and Repayment

IRS First Time Homebuyer Credit Extension for Military and Federal Employees

Many homebuyers took advantage of the First Time Homebuyer Credit from 2008 through the end date of September 2010. But did you know that some members of the military and certain federal employees who served outside of the U.S. still qualify for the credit if they enter a contract by April 30, 2011 and close by June 30, 2011? This program is for members of the Marine Corps, Army, Air Force, Navy, Foreign Service, or the US Intelligence Community that had at least one member serving overseas for at least 90 days during the period beginning after Dec. 31, 2008, and ending before May 1, 2010. There are also special provisions if a home was sold due to official orders. For more information on the extension of the home credit for members of the military and federal employees, see the IRS First Time Homebuyer Credit page.

Do I have to repay the First Time Homebuyer Tax Credit?

There have been some questions about repayment of the credit so I wanted to provide a short guide from the IRS website.

Repayment Triggers — Source – http://www.irs.gov/individuals/article/0,,id=233589,00.html

IF AND THEN
You bought a home in 2008 and received the FirstTime Homebuyer Credit You sell the home to a related party within the next 15 years You must repay the full amount of the credit, reduced by any amount of the credit that you previously repaid. You must complete the Form 5405 and attach it to your federal tax return for the year you sold the home to report that you sold the home and to repay the unpaid balance of the credit.* This is required whether you had a gain or a loss on the property.
You bought the home in 2009 or 2010 and  received the FirstTime
Homebuyer Credit
You sell the home to a related party within 36 months of buying the home You must repay the full amount of the credit. You must complete the Form 5405 and attach it to your federal tax return for the year you sold the home to report that you sold home and to repay the credit*. This is required whether you had a gain or a loss on the property.
You bought your main
home in 2008, 2009 or 2010
The home is destroyed or condemned and you do not replace it by rebuilding or buying a new main home within two years of the event You must repay the full amount of the credit. You must complete the Form 5405 and attach it to your federal tax return for the year of the destruction or condem-nation of the home to report the destruction or condemnation. You must also complete another Form 5405 and attach it to your federal tax return for the year in which the two-year period ends to report that you did not replace your main home within the two-year period and to repay the unpaid balance of the credit.*
You bought your home in 2008, 2009 or 2010 You convert the home entirely to a business or rental property You must repay the full amount of the credit. You must complete the Form 5405 and attach it to your federal tax return for the year you convert the home to report that you converted the home and to repay the unpaid balance of the credit.*
* You add the amount of FTHBC you must repay as an additional tax on your federal tax return. The amount may reduce your refund or increase the amount of tax you owe

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