Champ, you said,
"...if you sold at a loss, you will not have to repay the remaining credit, but I suspect this is unlikely 13 years down the road."
This is NOT as unlikely as you think it is. I went almost 6 years after the loss of my house before I learned that I didn't have to pay the FTHBC back.
I lost the house which I received this credit for in 2014 through foreclosure. And every year after that, as would file my taxes, TurboTax would simply ask if I sold the house. I always answered no because technically I didn't sell it....it was foreclosed. TurboTax would then subtract the $500 from my return as payment for the credit and then promptly move on to the next topic. I never questioned it as I genuinely thought I was stuck with it.
It wasn't until 2021 when I learned that there were exceptions to paying back the loan, which I met. And now, I'm in the same boat.
- The IRS will not allow me to amend my 2014 Tax year income tax return because the time limit to do so has passed.
- I cannot Include form 5405 with my current taxes because that only applies to disposal of the home for the current year, not the actual year the home ceased being my primary residence.
- I cannot e-file without including the payment (which legally I don't have to pay) because it gets rejected.
- Everyone I ask gives the same canned answer or doesn't know.
I called the IRS and the person I spoke with outright refused to give advice on how to proceed. I had to sweet talk them into transferring me to "Legal", only to be disconnected the second they "transferred" me. I'm at a loss as to what my next steps are.
