First-time Homebuyer Credit Repayment

Line 59b of Form 1040 is used by taxpayers who are required to repay the First-Time Homebuyer Credit, which was temporarily offered from 2008-2010.

The federal government offered the First-Time Homebuyer Credit as a tax incentive to taxpayers purchasing their first home. The credit was not permanent, however, as taxpayers utilizing the credit in 2008 were required to repay the credit over a fifteen year period (2008-2023). Taxpayers utilizing the credit in either 2009 or 2010, though, were not forced to repay the credit. These taxpayers, though, were required to repay if they failed to, for at least 36 months following the purchase, (1) retain possession of the home or (2) use the home as their primary residence. Put another way, failing to live in the home for the majority of the 36-month period following the purchase rendered the taxpayer responsible for repayment of the credit.

Line 59b of Form 1040, therefore, is the place where the credit is “repaid.” To determine the current year repayment amount, if any, taxpayers should consult the Form 5405 Instructions. In some cases, repaying taxpayers will need to complete and attach Form 5405. Under other circumstances, Form 5405 may not be necessary.

Photo by: Anthony Easton