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Received First Time Home Buyer Tax Credit, Now I Want to Sell

by Tabitha B
(Havana, FL)

I received the $8000 first time home buyer tax credit, now I want to sell before the 3 year period is up. My husband and I bought our house in July 2009. We received the $8000 credit, but now my husband has taken a job in another state.

We need to rent or sell the house, either way, we would have to pay the government back. How is this done and how much will we owe?

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ANSWER
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Tabitha,

That is a very good question. Unfortunately, you will have to check with a tax preparer about how the IRS will have you pay the money back and how much they will require.

Here's what I found off the IRS website:

You have to live in the house for 36 months from the date of purchase. IF you move out or sell it before that time is up, you have to repay the credit.

They will be looking for repayment of the full amount in the tax year you sold or moved out. The full amount will show up as an additional tax on your return for that year.

So be sure to check with your tax preparer for any exceptions or whether you would have to pay this back all at once or on a graduated scale.

Hope this helps,

Jeff

Comments for Received First Time Home Buyer Tax Credit, Now I Want to Sell

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First Time Home Buyer Tax Credit
by: Cheryl

My husband and I situation has changed recently too. We were wondering the same thing about the first time home buyer tax credit. Thank you for asking, now we have our answer!

Prinicpal residence but rent part of the house.
by: Anonymous

I bought in November 2009, and received $8000 credit. I found that in order to make ends meet in the tough economy I needed to rent out part of the house. While it is still my principal residence, what are the tax implications. Are we breaking any rules with FHA/HUD?

=====ANSWER=====

Hello Anonymous;

The main thing to be concerned about is the fact that you maintain the house as your primary residence.

The fact that you are renting a room should not cause you any problems with FHA because it would be next to impossible for them to know anyway.

However most if not all of the FHA loans done these days have what is called a "due on sale" clause that states you must pay off the house if you sold it on a land contract or some other type of sale like rent to own etc.

FHA does not allow people to own income producing properties unless it is a multi-unit (up to 4 units) and you live in one of them.

Tax wise, well seek out professional tax advice but technically speaking that is rental income and should be declared on your income taxes.

I really do not know if that would affect your tax credit from the IRS when you bought the house. Once again, talk with a tax person on this.

I hope you find this helpful.

Thanks for stopping by my website.

Kind Regards,

Jeffrey Ragan


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