FIRST TIME HB CREDIT

[TAXMAN]

I am slightly puzzlled. What to do when TP got credit in 2008 then began paying back 500.00 each year. TP abandoned house in 2012. Mortgager resold house in 2013. Does TP owe 500. for 2012 or the entire amount in 2012. Or does he pay 500 in 2012 and entire amount in 2013? TP did not get 1099A or 1099c in 2012. tp received no funds from mortgager on resell in 2013. I have no information concerning resell. What to do. Can someone enlighten me?

[Guest Taxed]

If there was a foreclosure or sale and there was a loss to the TP then you don't have to pay it back. It is in a IRS Q&A and also on that form I believe

[Jack from Ohio]

He may owe it all back. There is a place on form 5405 specifically for this situation, and it calculates what he owes in the year he loses ownership. He will need to know all the info about the repossession and the amount of mortgage forgiven.

[Guest Taxed]

I could not recall the form # but you are correct that form has to be completed to determine how much has to be paid back.

Last year I had one client who actually lost money when they sold the house due to divorce, and got away without paying it back.

[kcjenkins]

I expect there will be more of that situation for a while yet. Given the market right now. Although we keep reading that it is "coming back" it still has a way to go to meet the highs.