I received the first time homebuyer tax credit in 2008. I purchased my home then for $153,500. I sold the home in 2016 for $162,200, with $8,921 in selling expenses. I believe this puts me at $153,279. TurboTax Premier is saying I still owe $4,279 of the credit--why?
If you sell your main home to an unrelated person or entity, you repay the credit only up to the amount of gain, if any, on the sale.
Note: when calculating gain or loss on your main home if you received the credit, you reduce your basis by any remaining amount of the credit.
So in your case, you purchased the home for $153,500 and let's say after checking IRS Homebuyer Credit Account Look-up, it shows that you have a remaining credit of $4,279; you should enter the basis of your home in TurboTax as $149, 221. Now if you sold the home for $162,200 less the $8,921 expenses, this will show you had a gain of $4,058.
The above is just an example, keep in mind TurboTax does the calculations for you.
I would suggest to delete the form 5405 and go back over that section. Also go back through the sale of the home section and make sure you did not answer that you sold to a relative (If you didn't), because this will also lead to you having to repay back the credit.
To delete a form:
- Log into your account and select "continue my return"
- Once in the return, click on "My Account"
- click on "Tools"
- click on "Delete a Form"
- A list of all forms currently being used for your return will appear. Scroll down the list and locate Form 5405 Click delete directly next to the form. Confirm that you want the form deleted
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