$8000 New home buyer tax credit question

[Jewrrick]

I know if you sell the house within 3 years you have to repay the credit. Are there any exceptions to this, such as eminent domain situations?

[Real Estate Nate]

I know if you sell the house within 3 years you have to repay the credit. Are there any exceptions to this, such as eminent domain situations?

Good question, I'll find out and let you know.

[sc281]

I thought it was within 5 years...

[Jewrrick]

Good question, I'll find out and let you know.

Thank you sir, it is greatly appreciated.

I thought it was within 5 years...

I did too but was just told by a co-worker it was 3...not really relevant to the problem though.

[STANGGT40]

I know if you sell the house within 3 years you have to repay the credit. Are there any exceptions to this, such as eminent domain situations?

did you have a gain on the sale?

click on this and see part 3

http://www.irs.gov/pub/irs-pdf/f5405.pdf

[dville_gt's girl]

I'm sure Nate will figure them out but yes, there are exceptions.


Here is the tax form you would have to fill out - http://www.irs.gov/pub/irs-pdf/f5405.pdf


It's waived in the case of death, for example, or if the home is "involuntarily converted" from your principal residence (i.e. destroyed in a storm) and you buy a new principal residence within two years. Another exception waives the repayment requirement if the owner transfers the home to a spouse or former spouse incident to a divorce. And, service members who cease using the home as a principal residence within three years as a result of being deployed more than 50 miles away from the home for more than 90 days or indefinitely do not have to repay the credit.
If none of the exceptions apply, however, someone who sells or ceases to use the home as his or her principal residence during the first 36 months after purchase would be required to repay the credit.
Read more: http://www.kiplinger.com/columns/tax...#ixzz1Y23VnTuE

[craig]

This is how I understand. We bought a house with the $8k credit and are going to have to relocate right around the 3 year mark so I've looked into it some.

It is 3 years. You only have to pay it back if you make a gain on your house when you sell, and even then it's only upto the amount of the gain.

Examples:
If you make $2k on your house you pay back $2k.
If you make $10k you pay back $8k.
If you lost $2k you pay back nothing.

[STANGGT40]

I'm sure Nate will figure them out but yes, there are exceptions.


Here is the tax form you would have to fill out - http://www.irs.gov/pub/irs-pdf/f5405.pdf


It's waived in the case of death, for example, or if the home is "involuntarily converted" from your principal residence (i.e. destroyed in a storm) and you buy a new principal residence within two years. Another exception waives the repayment requirement if the owner transfers the home to a spouse or former spouse incident to a divorce. And, service members who cease using the home as a principal residence within three years as a result of being deployed more than 50 miles away from the home for more than 90 days or indefinitely do not have to repay the credit.
If none of the exceptions apply, however, someone who sells or ceases to use the home as his or her principal residence during the first 36 months after purchase would be required to repay the credit.
Read more: http://www.kiplinger.com/columns/tax...#ixzz1Y23VnTuE

read part 3 of the form you posted.

[Jewrrick]

This is how I understand. We bought a house with the $8k credit and are going to have to relocate right around the 3 year mark so I've looked into it some.

It is 3 years. You only have to pay it back if you make a gain on your house when you sell, and even then it's only upto the amount of the gain.

Examples:
If you make $2k on your house you pay back $2k.
If you make $10k you pay back $8k.
If you lost $2k you pay back nothing.

I understand that to be the case under normal conditions but I am talking about a "forced" relocation due to eminent domain. Sounds to me that as long as you purchase within 2 years of the forced relocation you will not have to repay. Will wait on Nate to confirm or deny that though.

[2011GT]

How is the gain calculated though?
I paid 149000 for my home. If I sell it for 149000 is that making a gain? After all I paid 149000 for it but Obama printed some money for my so really I only paid 141000. Does that make sense?

[sosoe]

How is the gain calculated though?
I paid 149000 for my home. If I sell it for 149000 is that making a gain? After all I paid 149000 for it but Obama printed some money for my so really I only paid 141000. Does that make sense?

Lol

[STANGGT40]

How is the gain calculated though?
I paid 149000 for my home. If I sell it for 149000 is that making a gain? After all I paid 149000 for it but Obama printed some money for my so really I only paid 141000. Does that make sense?

see the instructions in the link below; (form 5405 gain or loss worksheet)

http://www.irs.gov/instructions/i5405/ch02.html

[STANGGT40]

I understand that to be the case under normal conditions but I am talking about a "forced" relocation due to eminent domain. Sounds to me that as long as you purchase within 2 years of the forced relocation you will not have to repay. Will wait on Nate to confirm or deny that though.

what exactly are you waiting on? someone to spell it out for you? here you go!

the form and instructions for the form are pretty clear. you fall into the area of part 3, item 13 (f) or (g), depending on if you had a gain on the sale or not and if you purchase another primary residence within the next 2-years. the instructions have a work sheet to figure out if you had a gain, based on the lines that you have to fill in. your liability will be based on the gain and if you plan to purchase another primary residence within 2years. if you don't purchase a primary residence within 2-years, you'll be subject to repayment based on the gain. if you do purchase a primary residence within 2-years, you'll be required to maintain that home as your primary residence for the remainder of the 3-year period, and you will not have to pay back the credit.

Here is form 5405

http://www.irs.gov/pub/irs-pdf/f5405.pdf

...and here are the instructions:

http://www.irs.gov/instructions/i5405/ch02.html

[Real Estate Nate]

what exactly are you waiting on? someone to spell it out for you? here you go!

the form and instructions for the form are pretty clear. you fall into the area of part 3, item 13 (f) or (g), depending on if you had a gain on the sale or not and if you purchase another primary residence within the next 2-years. the instructions have a work sheet to figure out if you had a gain, based on the lines that you have to fill in. your liability will be based on the gain and if you plan to purchase another primary residence within 2years. if you don't purchase a primary residence within 2-years, you'll be subject to repayment based on the gain. if you do purchase a primary residence within 2-years, you'll be required to maintain that home as your primary residence for the remainder of the 3-year period, and you will not have to pay back the credit.

Here is form 5405

http://www.irs.gov/pub/irs-pdf/f5405.pdf

...and here are the instructions:
http://www.irs.gov/instructions/i5405/ch02.html

You have to much free time on your hands!

I would think the entity that enforced eminent domain would be responsible for repayment of the tax credit.

[momo]

I understand that to be the case under normal conditions but I am talking about a "forced" relocation due to eminent domain. Sounds to me that as long as you purchase within 2 years of the forced relocation you will not have to repay. Will wait on Nate to confirm or deny that though.

force the person or entity relocating you to pay and additional $8k if you have to pay it back.