Form 5405, Repayment of the First-Time Homebuyer Credit
Form 5405 tells the IRS that a home you claimed the first-time homebuyer credit for is no longer your main home, and it figures any credit you must repay. Complete the one-page form online and download it for your return.
This is the genuine IRS PDF, unmodified. Source: IRS official page.
What is 5405?
Form 5405, Repayment of the First-Time Homebuyer Credit, is filed by taxpayers who claimed the first-time homebuyer credit in an earlier year and later sold the home or stopped using it as their main home. The form notifies the IRS of the disposition and calculates how much of the credit, if any, has to be repaid with the current year tax return.
Repayment rules differ depending on when the home was purchased and why it stopped being your main home. Some situations, like certain sales at a loss or transfers between spouses, can reduce or eliminate the repayment, so the instructions are worth reading closely.
Who files 5405?
- Homeowners who claimed the first-time homebuyer credit and sold the home in the tax year
- Taxpayers whose credited home stopped being their main home, for example after converting it to a rental
- People repaying the credit in installments who had a change in circumstances that requires the form
- Certain surviving spouses or transferees who took over responsibility for the credit
How to fill out 5405
- Fill in your name and Social Security number, then describe what happened to the home in Part I, including the date of the disposition or change in use.
- If you sold the home to an unrelated person, complete Part III to figure your gain or loss using the reduced basis rules.
- Use Part II to calculate the repayment amount you owe with this year’s return, applying any exceptions that fit your situation.
- Carry the repayment amount to the appropriate line of your Form 1040 as directed by the instructions.
- Download the completed PDF and attach it to your federal income tax return.
Quick fill 5405 on this page
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Frequently asked questions
Do I need Form 5405 every year I repay the credit?
Not always. If you are simply making a scheduled annual installment on a 2008 purchase and nothing changed, you generally just report the repayment on your return. You file Form 5405 when you dispose of the home or it stops being your main home.
What if I sold the home at a loss?
For many dispositions, the repayment is limited to the gain on the sale, so a sale at a loss to an unrelated person can mean no repayment is due. Complete Part III of the form to work through the calculation, and confirm the details in the current instructions.