First Time Homebuyer Recapture

[Gail in Virginia]

I have two tax returns where the filer took the $7500 credit for 2008, knowing they would have to begin repaying it this year. I have filled out the returns with a 5405 attached and $500 showing on page 2 as the portion due this year. On both returns when I run the diagnostic I expect a message telling me the return cannot be filed until Feb. 14 but what I get is a message telling me 'Error: Box 13a, 13c, 13d or 13g must be selected when a repayment amount is present." 13a says that they sold the home to an unrelated person, 13c they sold the home to a related party, 13d the converted the home to a use other than main residence, and 13g is that the home was destroyed and they do not plan to rebuild/reacquire within two years. None of these apply. Has anyone else had this problem?

[BulldogTom]

I have one of those for sure this year coming in. Please post how you get this resolved.

Sorry I don't have an answer for you.

Tom

Lodi, CA

[chuck]

Did you check box 16b on page two and enter the $500 there.

[mircpa]

Error keeps popping up inspite of checking 16b. Since 5405 is not approved for e-file. I dont know if anybody has brought to attention of IRS this problem

[kcjenkins]

I have two tax returns where the filer took the $7500 credit for 2008, knowing they would have to begin repaying it this year. I have filled out the returns with a 5405 attached and $500 showing on page 2 as the portion due this year. On both returns when I run the diagnostic I expect a message telling me the return cannot be filed until Feb. 14 but what I get is a message telling me 'Error: Box 13a, 13c, 13d or 13g must be selected when a repayment amount is present." 13a says that they sold the home to an unrelated person, 13c they sold the home to a related party, 13d the converted the home to a use other than main residence, and 13g is that the home was destroyed and they do not plan to rebuild/reacquire within two years. None of these apply. Has anyone else had this problem?

I'm having trouble imagining a situation where NONE of these apply, yet they still have to repay? Could you give a bit more detail?

[Lion EA]

Aren't the 2008 amounts of up to $7,500 (round I = tax-free loan) repayable in 15 installments of up to $500 each beginning on the returns we are filing this season? I had only one that year, and she hasn't come in yet (and was for a very small amount anyway).

[grandmabee]

yes these are the 500 repayment for the next 15 years unless they sell etc. etc

[Dave T]

yes these are the 500 repayment for the next 15 years unless they sell etc. etc

I too had one client that qualified in 2008. They were reluctant to take the credit then but I suggested they take the credit, invest it in a CD and begin to pay it back accordingly.

When they came in last year for 2009 taxes I told them they didn't need to begin to pay back the credit until 2010 and they were fine with that but then wondered if they could pay the entire amout back all at once?

They haven't come in yet this year and I haven't researched whether they can pay back more than the required $ 500.00 or not. Does anyone know if that is possible?

Thanks

Dave T

[TAXBILLY]

The 2010 form seems to suggest it can be done but the instructions are not out yet:

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

taxbilly

[Don in Upstate NY]

I too had one client that qualified in 2008. ... I haven't researched whether they can pay back more than the required $ 500.00 or not. Does anyone know if that is possible?

From form 5405, line 16b ...

I am paying an installment of the credit I claimed for a home purchased in 2008. Divide line 14 by 15.0 (but see instructions if you checked box 13g for an event that occurred after 2008). This is the minimum amount you must repay with your 2010 return. Enter this amount (or a larger amount if you choose) here. (see instructions)

The instructions don't do much good since they were issued in July 2010 and the form was then revised in December 2010. But based on the form itself, it looks like you can pay off as much as you want as long as it's at least 1/15.

[kcjenkins]

OK, I had forgotten about that first credit, which was not really so much a 'credit' [which you get to keep] as an interest-free LOAN. I agree, then, if none of the things listed apply, the program should accept zero as a valid entry for those lines. Report it to the programmers, through the Suggestion Box option on the Support home page. I'm sure they will get it fixed soon.

[Gail in Virginia]

The error when you check the return seems to have been corrected with the form update I downloaded this morning. Now it is only flagging it for not being ready to e-file until Feb. 15, which I expected. Thanks for all the helpful suggestions.