Will I Have To Repay The 8000 Tax Credit? Q&A

Q: How long do I have to own my home to avoid repayment of the $8,000 tax credit?

A: One of the requirements of getting the 2009 – 2010 Homebuyer Tax Credit is that you have to maintain the home as a primary residence for 36 months. So if you move out — even if you still own the property — you’ll have to repay the credit. Additionally, if you sell the home you have to pay back the credit. The good news is that you only have to repay up to the home’s gain, so you may not have to repay the entire credit.

Q: I’m looking to move in to a new home. The home I’m currently in is my first home and I accepted the first-time homebuyer credit. I’m wondering how strict the government is on enforcing the mandatory three-year occupancy after accepting the credit. If I want to sell the house at two years and 10 months, would I have to repay the credit? If I would have to repay the credit, would it be prorated, or would I be required to repay the whole $8,000?

A: As you have indicated in your question, one of the requirements of getting the 2009 – 2010 Homebuyer Tax Credit is that you have to maintain the home as a primary residence for 36 months. So if you move out — even if you still own the property — you’ll have to repay the credit. Additionally, if you sell the home you have to pay back the credit. The good news is that you only have to repay up to the home’s gain, so you may not have to repay the entire credit.

There are some exceptions to the requirement to repay the credit immediately on your next tax return:

• If the spouse of a deceased homeowner continues to live in the house. If the spouse sells the home, though, before the time is up he or she must repay half the credit.
• Spouse remains in home to finish the 36 months after a divorce.
• Military or other personnel required to move more than 50 miles away.
• If your home is involuntarily damaged and you are forced to move. However, you have to buy a new home within two years.

Q: I bought my house in July 2009. I now have to recieve spinal surgery and have to move to a family member’s house for several months during recovery for necessary care. I thought I would just rent the purchased home while I recover and move back in a year. I will be about six months shy of the thirty six month rule. Do I have to repay the eight grand?

A: One of the requirements of getting the 2009 – 2010 Homebuyer Tax Credit is that you have to maintain the home as a primary residence for 36 months. So if you move out — even if you still own the property — you’ll have to repay the credit. Additionally, if you sell the home you have to pay back the credit. The good news is that you only have to repay up to the home’s gain, so you may not have to repay the entire credit. There are some exceptions to the requirement to repay the credit immediately on your next tax return: