What would cause me to have to repay the first-time homebuyer credit ahead of schedule?
If your home is destroyed and you acquire (or plan to acquire) another main home within two years of the catastrophe, you'll continue to repay the installments as if nothing happened.
Otherwise, you'd have to repay the credit ahead of schedule, in part or in full, if:
- You turn the home into a rental or began using it for business, rather than as your primary residence.
- You sell the home to a related person.
- A "related person" is defined as spouse, your ancestors (parents and grandparents), or lineal descendants (children and grandchildren), as well as your spouse's ancestors or lineal descendants.
- You sell (or give up the home in foreclosure) to a non-related person and profited from the sale.
- Your home is destroyed and you don't plan to acquire another one within two years of the event. You must include all remaining installments as additional tax on the tax return for the year in which the two-year period ends.
Certain events may reduce or eliminate repayment, like:
- You sell your home or stop using it as your main home to fulfill U.S. government orders for a qualified official extended duty service. If you or your spouse is a member of the uniformed services, Foreign Service or an employee of the intelligence community, you do not need to repay the credit.
- You sell the house (or give it up in foreclosure) to a non-related person, and there was no gain on the sale.
- You transferred the home to your ex-spouse as part of your divorce settlement (your ex is now responsible for repaying the credit).
- The taxpayer who received the credit dies. In this case, no repayment is required. If you claimed the credit on a joint return for 2008, and your spouse dies, your spouse's remaining half of the credit does not have to be repaid.