Instructions For Form 5405 (Rev. July 2010) (Page 2 of 4) in pdf

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9. You acquired your home from a related person. This

If you checked the “Yes” box on line C, attach a copy of the

includes:

pages from a signed contract to make a purchase showing all

parties’ names and signatures, the property address, the

a. Your spouse, ancestors (parents, grandparents, etc.), or

purchase price, and the date of the contract.

lineal descendants (children, grandchildren, etc.).

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If you are claiming the credit as a long-time resident of the

b. A corporation in which you directly or indirectly own more

same main home, attach copies of one of the following: Form

than 50% in value of the outstanding stock of the corporation.

1098, Mortgage Interest Statement (or substitute statement),

c. A partnership in which you directly or indirectly own more

property tax records, or homeowner’s insurance records. These

than 50% of the capital interest or profits interest.

records should be for 5 consecutive years of the 8-year period

For more information about related persons, see the

ending on the purchase date of the new main home.

discussion under Nondeductible Loss in Chapter 2 of Pub. 544,

Sales and Other Dispositions of Assets. When determining

whether you acquired your main home from a related person,

Repaying the Credit (for Purchases After

family members in that discussion include only the people

2008)

mentioned in 9a above.

10. You acquired your home after November 6, 2009, from a

If you purchased the home after 2008, you generally must

person related to your spouse. This includes your spouse’s

repay the credit if, during the 36-month period beginning on the

ancestors or lineal descendants (for example your

purchase date and after the year for which you claim the credit,

parents-in-law or your stepchildren), and any relationships

you dispose of the home or it ceases to be your main home.

described in 9b or 9c above that your spouse has.

This includes situations where you sell the home, you convert

the entire home to business or rental property, the home is

Amount of the Credit

destroyed, condemned, or disposed of under threat of

condemnation, or the lender forecloses on the mortgage.

First-time homebuyer. Generally, the credit is the smaller of:

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$8,000 ($4,000 if married filing separately), or

You repay the credit by including it as additional tax on the

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10% of the purchase price of the home.

return for the year you dispose of the home or it ceases to be

Long-time resident of the same main home. Generally, the

your main home. However, if the home is destroyed,

credit is the smaller of:

condemned, or disposed of under threat of condemnation, and

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$6,500 ($3,250 if married filing separately), or

you do not acquire a new home within 2 years of the event, you

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10% of the purchase price of the home.

must repay the entire repayment amount with the return for the

year in which the 2-year period ends.

Phase-out of the credit for homes purchased before

November 7, 2009. You are allowed the full amount of the

If you own the home and use it as your main home for at

credit if your modified adjusted gross income (MAGI) is $75,000

least 36 months beginning on the purchase date, you do

or less ($150,000 or less if married filing jointly). The phase-out

TIP

not have to repay any of the credit or file Form 5405

of the credit begins when your MAGI exceeds $75,000

again.

($150,000 if married filing jointly). The credit is eliminated

completely when your MAGI reaches $95,000 ($170,000 if

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

married filing jointly).

each spouse is treated as having been allowed half of the credit

Phase-out of the credit for homes purchased after

for purposes of repaying the credit.

November 6, 2009. You are allowed the full amount of the

credit if your modified adjusted gross income (MAGI) is

Exceptions. The following are exceptions to the repayment

$125,000 or less ($225,000 or less if married filing jointly). The

rule.

phase-out of the credit begins when your MAGI exceeds

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If you sell the home to someone who is not related to you,

$125,000 ($225,000 if married filing jointly). The credit is

the repayment in the year of sale is limited to the amount of

eliminated completely when your MAGI reaches $145,000

gain on the sale. The amount of the credit in excess of the gain

($245,000 if married filing jointly).

does not have to be repaid. (See item 9 under Who Cannot

What To Attach to Your Return

Claim the Credit on this page for the definition of a related

person.) When figuring the gain, reduce the adjusted basis of

If you claim the credit on your 2009 (or later) original or

the home by the amount of the credit.

amended tax return, you must attach the following

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If the home is destroyed, condemned, or disposed of under

documentation regarding your main home (as applicable). If

threat of condemnation, you do not have to repay the credit if

you do not attach the documentation, the credit may not be

you purchase a new main home within 2 years of the event and

allowed.

you own and use it as your new main home during the

Attach a copy a of your settlement statement showing all

remainder of the 36-month period.

parties’ names and signatures, the property address, the

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If, as part of a divorce settlement, the home is transferred to

contract sales price, and the date of purchase. In most cases,

a spouse or former spouse, the spouse who receives the home

your settlement statement is your properly executed Form

is responsible for repaying the credit if, during the 36-month

HUD-1, Settlement Statement. In locations where the

period beginning on the purchase date, he or she disposes of

signatures of the buyer and seller are not required, the IRS

the home or it ceases to be his or her main home and none of

encourages the buyer to sign the settlement statement before

the other exceptions apply.

attaching it to the tax return — even if the settlement statement

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Members of the uniformed services or Foreign Service and

does not include a signature line.

employees of the intelligence community (defined on page 3)

If you are unable to obtain a settlement statement because

do not have to repay the credit if, after 2008, they sell the home

you purchased a mobile home, attach a copy of your executed

or the home ceases to be their main home because they

retail sales contract showing all parties’ names and signatures,

received Government orders to serve on qualified official

the property address, the purchase price, and the date of

extended duty (see the instructions for line 12 beginning on

purchase.

page 3).

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If you are claiming the credit for a newly constructed home

If you die, repayment of the credit is not required. If you

and you do not have an executed settlement statement, attach

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

a copy of your certificate of occupancy showing your name, the

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

property address, and the date of the certificate.

the credit if, during the 36-month period beginning on the

Additional documentation. You should also attach the

purchase date, he or she disposes of the home or it ceases to

following documentation, if applicable, to avoid delays in the

be his or her main home and none of the other exceptions

processing of your return and the issuance of any refund.

apply.

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Instructions for Form 5405 (Rev. 07 2010)

Instructions For Form 5405 (Rev. July 2010) Page 2

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