No, down payment assistance grants are not considered taxable income. If you received a Form 1099-MISC and the amount paid is added to your taxable income when you enter it in the 1099-MISC interview, you will have to make an adjusting entry to remove it.
According to the IRS, "Generally, down payment assistance will not be included in the homebuyer’s gross income for federal income tax purposes. However, if the buyer receives down payment assistance from a seller-funded program, the homebuyer must reduce the cost basis of the home because the down payment assistance represents a rebate or reduction in the purchase price thus lowering the homebuyer’s cost basis under Internal Revenue Code section 1012."
See Is down payment assistance includable in the homebuyer’s income?
Enter the information as follows in the 1099-MISC interview:
-
Enter the 1099-Misc in the Other Common Income section of Income and Deductions. (Enter "1099 misc" in the Search Box and Select "Jump to 1099 misc form")
-
For "Description", enter "Down payment grantt"
-
Also check that it does not involve work like your main job, that it did not involve an intent to make money, andis not a recurring payment (received in the past or expected in the future) (these questions only apply to active, not passive, income).
-
The income will be reported on line 8 of Form 1040 of your return (Other income from Schedule 1, Line 9).
To enter the "adjusting entry":
-
Go to Less Common Income, Miscellaneous Income and Other reportable income. Enter "Lawsuit settlement" in the Search Box and Select "Jump to lawsuit settlement" to get to this screen
-
Continue to the screen "Other Taxable Income". Enter the description as "Down Payment Grant Offset" and the amount as a negative number. Entering "- $10,000" (example) here will offset the amount reported on the Form 1099-MISC. These are NOT wages.
