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It’s Time To Pay Back Homebuyer Credit of 2008…

March 7, 2011

As you may be aware, there are a number of new items on the 2010 Form 1040. GAI (www.gunwel.com) wants to help you with any new item that you are not familiar with on the 2010 1040. One of those new items is the oft-forgotten set of repayment rules for the IRC Section 36 homebuyers tax credit (otherwise known as the “first-time home buyer credit,” which is a complete misnomer). The home buyer credit repayment rules will kick in for the first time with 2010 returns.

  • Credits claimed for 2008 home purchases generally must be paid back ratably over 15 years, starting with 2010 returns. This requirement will affect lots of taxpayers.
  • Credits claimed on an original or amended 2008 or 2009 return for 2008 or 2009 home purchases may have to be repaid in full if clients stopped using their homes as principal residences during 2010. This requirement will affect fewer taxpayers.

For the 2010 tax year, credit repayments amounts are calculated using Parts III and IV of Form 5405 (First-Time Homebuyer Credit and Repayments of the Credit), which must be filed with Form 1040. Credit repayment amounts are treated as federal income tax additions and must be reported as such online 59 of the 2010 Form 1040. Therefore, credit repayment can be made with Form 4868 extension requests filed by 4/18/11.

This credit repayment rules will probably come as a complete (and unwelcome) surprise to most affected taxpayers. Please give Gunwel Tax & Bookkeeping a call at 212-979-6830 or stop by and visit us as the worst thing is to have an unwanted tax surprise (in a bad way). You work hard for your money, let Gunwel work smart to help you keep it. We are open Monday- Friday 8am to 8pm and Saturdays from 8am to 5pm. See you soon!

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