Instructions For Form 5405 - Repayment Of The First-Time Homebuyer Credit

Instructions for Form 5405

Department of the Treasury

Internal Revenue Service

(Rev. December 2016)

Repayment of the First-Time Homebuyer Credit

Section references are to the Internal Revenue Code unless

credit for purposes of repaying the credit. Each spouse who

otherwise noted.

meets condition 2 under

Who Must File

must file a separate

Form 5405.

General Instructions

Exceptions. The following are exceptions to the repayment

rule for homes that were destroyed or sold through

Future Developments

condemnation or under threat of condemnation.

If the home is destroyed or you sell the home through

For the latest information about developments related to

condemnation or under threat of condemnation, you don't

Form 5405 and its instructions, such as legislation enacted

have to repay the credit if you purchase a new main home

after they were published, go to

within 2 years of the event and you own and use it as your

Reminder

main home during the remainder of the 36-month period.

Under this exception, you must purchase a new main home

Homes purchased after 2008. If you purchased your home

even if the 2-year period ends after the end of the 36-month

after 2008, and you owned it and used it as your main home

period. Also, there is no holding period for the new main

for at least 36 months beginning on the purchase date, you

home if you purchase it after the end of the 36-month period.

don't have to repay any of the credit or file Form 5405.

If the home is destroyed or you sell the home through

Purpose of Form

condemnation or under threat of condemnation to someone

who isn't related to you and you don't acquire a new home

Use Form 5405 to do the following.

within the 2-year period, the repayment with your return for

Notify the IRS that the home for which you claimed the

the year in which the 2-year period ends is limited to the gain

credit was disposed of or ceased to be your main home in

on the disposition as determined in Part III of Form 5405. The

2016. Complete Part I and, if applicable, Parts II and III.

amount of the credit in excess of the gain doesn't have to be

Figure the amount of the credit you must repay with your

repaid. (See

persons, later.) Under this exception,

2016 tax return. Complete Part II and, if applicable, Part III.

you must make a repayment (limited to the gain) even if the

Who Must File

2-year period ends after the end of the 36-month period.

If the home was transferred to a spouse (or ex-spouse as

You must file Form 5405 with your 2016 tax return if you meet

part of a divorce settlement), the spouse who received the

either of the following conditions.

home is responsible for repaying the credit if he or she meets

condition 2 under

Who Must File

(regardless of whether he or

1. You purchased your home in 2008 and:

she was the purchaser) and none of the other exceptions

a. You disposed of it in 2016, or

apply.

b. You ceased using it as your main home in 2016.

If you die, repayment of the credit isn't required. If you

2. You are repaying the credit because you purchased

claimed the credit on a joint return and then you die, your

your home in 2011, the home was destroyed or you sold it

surviving spouse would be required to repay his or her half of

through condemnation or under threat of condemnation in

the credit if he or she meets condition 2 under

Who Must File

2014, and the event occurred during the 36-month period

(regardless of whether he or she was the purchaser) and

that began on the purchase date. But see Exceptions, later.

none of the other exceptions apply.

Related persons. Related persons include the following.

In all other cases, you aren't required to file Form 5405.

1. Your spouse, ancestors (parents, grandparents, etc.),

Instead, enter the repayment on Form 1040, line 60b, or

or lineal descendants (children, grandchildren, etc.).

Form 1040NR, line 59b, whichever applies. For example, you

aren't required to file Form 5405 if you are making an

2. A corporation in which you directly or indirectly own

installment payment of the credit you claimed for a home you

more than 50% in value of the outstanding stock of the

purchased in 2008 and you owned it and used it as your main

corporation.

home during all of 2016.

3. A partnership in which you directly or indirectly own

Repaying the Credit (for Purchases in

more than 50% of the capital interest or profits interest.

2011)

For more information about related persons, see the

discussion under Nondeductible Loss in chapter 2 of Pub.

For 2008 purchases, see

Part II. Repayment of the

544, Sales and Other Dispositions of Assets. When

Credit, later.

determining whether you acquired your main home from a

related person, family members in that discussion include

CAUTION

only the people mentioned in (1) above.

You generally must repay the credit with your 2016 tax

return if the home was destroyed or you sold it through

condemnation or under threat of condemnation in 2014 and

the event occurred during the 36-month period that began on

the purchase date. But see

Exceptions

next.

If you and your spouse claimed the credit on a joint return,

each spouse is treated as having been allowed half of the

Nov 18, 2016

Cat. No. 54378F

Instructions For Form 5405 - Repayment Of The First-Time Homebuyer Credit - 2016

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