Preparing a 2012 tax return. TP had First Time Home Buyer Credit..
IMPORTANT: Purchased 05/27/2008 Received $7500 (actually only 1/2 because split with boyfriend)
Sold 04/06/2012 at a loss.
TP received credit on 2009's return, started repayment on 2010's with a payment on 2011's.
TP took a loss on sale and it was more than 36 months after purchase.
No matter what I check or figure I put in, there's errors.
Questions: Is this TP required to repay the entire balance back with the 2012's return?
Even if there's a loss, do they still repay the entire balance back?
Even if 36 months have passed, do they still repay the entire balance back?
I remember there was this small window with different rules and everything I research says the full amount of the credit unpaid is to be included on the 2012's return. I'm sure I override the errors but I keep going back and forth if they pay it all back or not. Come on some of you 'old timers' that were doing taxes 10-12 years ago and can help me with this. I'm spending way too much time on this!
Thanks so much
I'm an old timer with a 2012 Quickfinder.....lol
If home is sold before the 15yr period ends balance is repaid in the year of sale. Repayment is limited to the gain from the sale unless home is sold to related person. Reduce the basis in the home by the unpaid balance when calculating the gain.
What EXACTLY are the errors?
Are you looking at Part 3 of the 5405 to see how the calculation works?
I figured it out! I didn't realize there was a 'copy 2' of the Form 5405. duh
Thanks TaxGuyBill, you were right that I couldn't figure out how to 'populate' the figures for Part lll and found there's a part 2 where I put the figures in.
Thanks also to dhk for answering my question about paying it back..at least I knew the loss would cover what was owed back.
I remember when the IRS came out with the first time home buyer and those that got it first were the ones to pay back and even received less than those that got more and didn't have to pay it back.
I can move on now!
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