First Time Homebuyer Credit RECALL!!
It was 2009, you just bought your first home. You were on cloud 9! You got your cake and ate it too because you took advantage of the First Time Homebuyer Credit. Now, fast forward to 2012. Your house is worth half of what you paid for it, your spouse lost his or her job and you’re struggling to put food on the table. You’re unable to make your mortgage payment and in your best long term interest, you choose to Short Sale your home. In steps me. I list your home, find you a buyer and successfully negotiate an approved short sale. Then, the bomb is dropped… You took advantage of the First Time Homebuyer Credit and just now thought to tell me. Unfortunately, this CANNOT be mitigated. You need to know this whether you’re going through a foreclosure, short sale or traditional resale. You must report the sale or other disposition of your main home on a completed Form 5405, First-Time Homebuyer Credit and Repayment of the Credit, and attach it to your tax return for the year of the sale or other disposition. The IRS matches information from a variety of sources when your home is sold, destroyed, foreclosed on, or is no longer your main home. If you received the FTHBC and the IRS has information that the home is no longer your main home, the IRS checks your tax records to find out if you reported the sale or other disposition on the Form 5405. You may or may not have to repay the credit, but you do need to report the change to the IRS on the Form 5405. The IRS sends you a CP03c Notice, Important information regarding your First-Time Homebuyer Credit, when it has information your home is no longer your main home and you did not report the sale or other disposition on your federal tax return. This notice reminds you to report the sale or other disposition of your home on the Form 5405. If you bought a home in 2008 and received the first-time homebuyer credit, then 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. If you bought the home in 2009 or 2010 and received the first-time homebuyer credit, then you sell the home to a related party within 36 months of buying the home, you must repay the full amount of the credit. All of this is required whether you had a gain or a loss on the property. You add the amount of FTHBC you must repay as an increase to tax on your federal tax return. The amount may reduce your refund or increase the amount of tax you owe. Please make sure you consult a real estate tax attorney for further details. I am always here to assist you in any questions and or/direct you to the proper professionals.
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Posted on July 19, 2012, in Real Estate and tagged Attorney, Buy a Home, Buyer, Closing Costs, CP03C Notice, First Time Homebuyer Credit, Foreclosure, Form 5405, Fort Myers, FTHBC, Homebuyer, IRS, Kristen Pell, Loan, Mortgage, Property Guiding, Real Estate Biz, Realtor, Seller, Short Sale, SWFL Real Estate. Bookmark the permalink. Leave a Comment.