Form 5405 repay of 7500 credit and sale of house

[Trnr395]

My client received the 7500 credit that has been being paid back for four years so = $2000.  She sold her house for a $72,372 and original purchase price was $77,250.  For a loss of $4878.00, she still owes $5500 for the credit but the loss offsets that so total amount to be paid back is $622???  Am I thinking this correctly?

[Terry D EA]

Yep! If there was significant gain or any gain the the remainder of the credit up to the amount of the gain has to be repaid.

[Jack from Ohio]

My client received the 7500 credit that has been being paid back for four years so = $2000.  She sold her house for a $72,372 and original purchase price was $77,250.  For a loss of $4878.00, she still owes $5500 for the credit but the loss offsets that so total amount to be paid back is $622???  Am I thinking this correctly?

Because they sold at a loss, they do not owe any further repayment.  Follow form 5405.  Save yourself time and paperfile.  The IRS database is messed up in that area and will reject it.