Did you buy your current home between April and December of 2008 and claim the then-new federal tax credit for first-time homebuyers?
If so, repayment of the credit begins this year, and the first installment is due with your 2010 tax return.
You might already have received a letter from the IRS summarizing how much you received and what amount you need to repay. Generally, your installments will be spread in equal amounts over the next fifteen years.
Example: Say you received the maximum credit of $7,500. Since $7,500 divided by 15 is $500, that’s how much you’d add to your tax liability, beginning with your 2010 return.
In some cases – such as if you sell your home or convert it to a rental – you may have to pay back some or all of the credit before the end of the 15-year “recapture” period. The repayment is due in the tax year that the ownership or use of your home changes.
In other situations, including when you move due to military or certain other government service orders, your repayment could be reduced or eliminated.
Other exceptions may apply. Please call if you have questions about how the payback requirements affect you.
Posted by gillilandcpa 
