The first-time homebuyer tax credit was first enacted in 2008. To help offset the housing crisis, lawmakers structured it as a no-interest loan. Taxpayers who used it had to pay it back over time (in annual installments through your tax return), but in 2009, the payback requirement was eliminated. Many borrowers in 2008 and others are understandably frustrated, not only regarding the tax credit revision, but also concerning how they might pay the government back.
To help, the IRS recently created a tool to help gather the information required and streamline the process. The tool helps simplify information, and gives taxpayers visibility to their balance, amount paid back to date, total tax credit received, annual installment amount, and also includes the exact payback amount in your federal tax filing. Before the IRS created the tool, taxpayers were responsible for keeping track of all of this information themselves. To access the tool, taxpayers simply enter their social security number, birthday and some other identifying information.
In addition to 2008 taxpayers, those who used the credit in 2009 and 2010 and sold their homes within three years of purchase are also required to pay back their benefit. For more information and to access the tool, please visit www.irs.gov.
