Instructions For Form 5405 Draft - (Rev. December 2011) (Page 2 of 6) in pdf

Note. If you were unmarried when you purchased your

Phase-out of the credit. You are allowed the full

home and qualified for the credit, then married someone

amount of the credit if your modified adjusted gross

who does not qualify for the credit, and are claiming the

income (MAGI) is $125,000 or less ($225,000 or less if

credit for the year in which you are married, you can do

married filing jointly). The phase-out of the credit begins

one of the following.

when your MAGI exceeds $125,000 ($225,000 if married

•

You can claim up to an $8,000 credit ($6,500 credit if a

filing jointly). The credit is eliminated completely when

long-time resident) on a joint return.

your MAGI reaches $145,000 ($245,000 if married filing

•

You can claim up to a $4,000 credit ($3,250 credit if a

jointly).

long-time resident) on a married filing separate return

For a definition of MAGI, see the instructions for line 5

and your spouse is not allowed to claim any part of the

on page 4.

credit on his or her return.

What To Attach to Your Return

Main home. Your main home is the one you live in most

You must attach the following documentation regarding

of the time. It can be a house, houseboat, mobile home,

your main home (as applicable). If you do not attach

cooperative apartment, or condominium.

the documentation, the credit may not be allowed.

Who Cannot Claim the Credit

Attach a copy of your settlement statement showing all

parties’ names and signatures, the property address, the

You cannot claim the credit if any of the following apply.

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

1. The purchase price of the home (defined in the

cases, your settlement statement is your properly

instructions for line 1 on page 4) is more than $800,000.

executed Form HUD-1, Settlement Statement. In

2. Your modified adjusted gross income is $145,000

locations where the signatures of the buyer and seller are

or more ($245,000 or more if married filing jointly).

not required, the IRS encourages the buyer to sign the

See the instructions for line 5 on page 4.

settlement statement before attaching it to the tax

3. You cannot claim the credit for any year for which

return—even if the settlement statement does not

you can be claimed as a dependent on another person’s

include a signature line.

tax return.

If you are unable to obtain a settlement statement

4. You (and your spouse if married) are under age 18

because you purchased a mobile home, attach a copy of

on the date of purchase.

your executed retail sales contract showing all parties’

5. You are a nonresident alien.

names and signatures, the property address, the

6. Your home is located outside the United States.

purchase price, and the date of purchase.

7. Neither you nor your spouse (if married) was on

If you are claiming the credit for a newly constructed

qualified official extended duty outside the United States

home and you do not have an executed settlement

as a member of the uniformed services or Foreign

statement, attach a copy of your certificate of occupancy

Service or an employee of the intelligence community.

showing your name, the property address, and the date

See the instructions for line D on page 3.

of the certificate.

8. You acquired the home by gift or inheritance.

Additional documentation. You should also attach the

9. You acquired your home from a related person.

following documentation, if applicable, to avoid delays in

This includes:

the processing of your return and the issuance of any

a. Your spouse, ancestors (parents, grandparents,

refund.

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

•

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

b. A corporation in which you directly or indirectly own

of the pages from a signed contract to make a purchase

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

showing all parties’ names and signatures, the property

corporation.

address, the purchase price, and the date of the contract.

c. A partnership in which you directly or indirectly own

•

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

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

the same main home, attach copies of one of the

For more information about related persons, see the

following: Form 1098, Mortgage Interest Statement (or

discussion under Nondeductible Loss in Chapter 2 of

substitute statement), property tax records, or

Pub. 544, Sales and Other Dispositions of Assets. When

homeowner’s insurance records. These records should

determining whether you acquired your main home from

be for 5 consecutive years of the 8-year period ending on

a related person, family members in that discussion

the purchase date of the new main home.

include only the people mentioned in 9a above.

10. You acquired your home from a person related to

Repaying the Credit (for Purchases

your spouse. This includes your spouse’s ancestors or

After 2008)

lineal descendants (for example your parents-in-law or

your stepchildren), and any relationships described in 9b

If you purchase the home after 2008, and you own it and

or 9c above that your spouse has.

use it as your main home for at least 36 months

beginning on the purchase date, you do not have to

Amount of the Credit

repay any of the credit or file Form 5405 again.

For 2008 purchases, see Part IV, Repayment of

First-time homebuyer. Generally, the credit is the

Credit Claimed for 2008, 2009, or 2010, later.

smaller of:

•

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

CAUTION

•

10% of the purchase price of the home.

You generally must repay the credit if after the year for

which you claim the credit, you dispose of the home or it

Long-time resident of the same main home.

ceases to be your main home during the 36-month period

Generally, the credit is the smaller of:

beginning on the purchase date. This includes situations

•

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

where you sell the home (including through foreclosure),

•

10% of the purchase price of the home.

you convert the entire home to business or rental use,

Note. See the instructions for line 1 on page 4 for the

the home is destroyed or condemned, or you dispose of

definition of purchase price.

the home under threat of condemnation.

-2-

Instructions for Form 5405 (Rev. 12-2011)

Instructions For Form 5405 Draft - (Rev. December 2011) Page 2

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