Technical topics regarding tax preparation.
8-Aug-2022 9:54am
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HI all. i am working on a return where this new client has a from 5405 on last years return. What does that mean for this year. Never seen this form but looks like it is all about repayment of a home buyers credit. Thanks for your help
8-Aug-2022 10:03am
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First-Time Homebuyer's Credit from 2008. For purchases in 2008, the credit was repayable in equal installments over fifteen years. For 2009 it did not, generally, have to be repaid. So I always check with a new client as to when they bought their home. In general, the last repayment for a home bought in 2008 will be on the 2024 return (fifteen years from 2010)
8-Aug-2022 11:23am
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Who Must File
You must file Form 5405 with your 2020 tax return if you
purchased your home in 2008 and you meet either of the
following conditions.
1. You disposed of it in 2020.
2. You ceased using it as your main home in 2020.
But see Exceptions, later.
In all other cases, you aren't required to file Form 5405.
Instead, enter the repayment on 2020 Schedule 2 (Form
1040), line 7b. For example, you aren't required to file Form
5405 if you are making an installment payment of the credit
you claimed for a home you purchased in 2008, and you
owned and used the home as your main home during all of
2020.
Retired, no salvage value.
13-Aug-2022 11:12am
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so correct me if i am wrong. this is only applicable to purchase in 2008 and i will need to pick up the income every year until 2024 ?
13-Aug-2022 12:39pm
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The 5405 filing would indicate the home was no longer the client's principal residence (sold, converted to rental, etc) and the remaining annual paybacks became due in full. No future accounting for the credit repayments.
Retired, no salvage value.
13-Aug-2022 3:34pm
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Thank you for that info and correcting me HowardS
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