Tax Credit Repayment?

A reader asks; “When I purchased my home several years ago I received a federal tax credit.  If I sell it now do I have to repay that credit?” That’s simple – it depends. I assume that you are talking about the federal home buyer tax credits that ran from 2008 through 2010.  If you purchased your home in 2009 – 2010 either as a first time buyer or as a long term home owner and you lived in the house as your principal residence for at least 36 months you should not have any repayment liability.  If you purchased your home in 2008  as a first time home buyer receiving up to a $7,500 credit you are responsible for repaying that amount over fifteen years beginning with your 2010 tax return that you filed in 2011. At that point in time that the house stops being your main home i.e.  when you sell the house, covert it to a rental or vacation property, transfer the house to a spouse in a divorce settlement, the house is destroyed or lost in a foreclosure, you no longer live in the home for the greater number of nights in a year, or you die a determination is made as to whether or not the remaining balance is immediately due and payable.  In the case of selling the house you are required to repay the credit balance only up to the amount of any gain. The 2008 tax credit, while not as good a deal as the 2009 – 2010 credits, was essentially an interest free loan from the federal government.  Be certain to confer with your tax adviser or the   IRS web site  with regards your particular situation.  Remember whether buying or selling, moving up or downsizing, Lincoln or Omaha, the Vaccaros; Paul & Susan, stand ready to assist you, your family, friends and co-workers. Call or email us today! Lincoln (402)817-0355 , Omaha (402)577-0820, info@WeSellNebraska.com (Paul & Susan Vaccaro – CBSHome Real Estate 15950 W Dodge Road, Suite 200, Omaha, NE 68118 – Woods Bros Realty 3737 S 27th Street, Lincoln, NE 68502. 

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