When the first-time home buyer tax credit was enacted in 2008, in the aftermath of the housing crisis, it was structured as a no-interest loan and taxpayers who used it had to pay it back over time (in annual installments through your tax return). In 2009, the credit was amended to eliminate the pay-back requirement.
To help 2008 and other borrowers who have to pay back the proceeds of that credit, the IRS today released a “tool” to help make that process easier, the First-Time Homebuyer Credit Lookup Tool.
In essence, the tool simplifies the gathering of information you need to include the proper pay-back amount in your federal tax filing:
- Balance of your first-time homebuyer credit
- Amount paid back to date
- Total amount of the credit received
- Annual installment repayment amount
Prior to release of this tool, taxpayers had to gather this information themselves for reporting on IRS Form 5405. Now it’s available through the IRS by punching in your Social Security number, date of birth, and some other identifying information.
Who else besides 2008 credit users need to pay back their benefit? The IRS says those who used the credit in 2009 or 2010 and then sold their home within three years of purchase. (Under the program, you have to own your primary residence for three years after you take the credit to avoid the pay-back rule.)
You can get more on the rules and the new look-up tool from the IRS.