Instructions For Form 5405 Draft - (Rev. December 2011) (Page 4 of 6) in pdf

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For the definition of a related person or a person

You converted the entire home to business or rental

related to your spouse, see item 9 or 10 on page 2 under

property,

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Who Cannot Claim the Credit.

You abandoned the home (except in connection with a

sale or foreclosure),

Line F. Check the box if you are choosing to claim the

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The home was destroyed, condemned, or disposed of

credit on your 2010 original or amended return for a main

under threat of condemnation, or

home purchased in 2011.

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The taxpayer who claimed the credit died in 2011.

Part II. Credit

Also complete Part III if you are claiming the credit on

your 2011 return and line 12, 13f, 13g, or 13h applies.

Line 1. The purchase price is the adjusted basis of your

Sales (including through foreclosure). In the case of

home on the date you purchased it. This includes certain

a sale (including through foreclosure) of your main home,

settlement or closing costs (such as legal fees and

you must repay the credit with the tax return for the tax

recording fees) and your down payment and debt to

year in which the sale is completed. In general, this will

purchase the home (such as a first or second mortgage

occur when the purchaser (or lender) obtains title to your

or notes you gave the seller in payment for the home). If

home.

you build, or contract to build, a new home, your

Line 11. If your home was destroyed or condemned, or

purchase price includes costs of construction. For more

you disposed of the home under threat of condemnation,

information about adjusted basis, see Pub. 551, Basis of

enter the date it was destroyed, condemned, or disposed

Assets.

of under threat of condemnation (or the date it ceased to

If you purchase property with a house that you use as

be your main home, whichever is earlier).

your personal residence and a separate structure or unit

Line 12. Check the box if you (or your spouse if

that you do not use as your residence, you must allocate

the purchase price between the portion of the property

married):

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that you use as your residence and the portion of the

Are, or were, a member of the uniformed services or

Foreign Service or an employee of the intelligence

property with the separate structure or unit. Examples

community (defined earlier), and

include:

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A house that you lived in and a detached garage or

Sold the home or the home ceased to be your main

outbuilding that you use solely for business purposes.

home after 2008 because you (or your spouse if married)

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A duplex with two separate dwelling units and you live

received Government orders to serve on qualified official

in one unit and rent out the other unit.

extended duty (defined below).

If you (or your spouse if married) meet both of these

Enter on line 1 the purchase price allocated to your

conditions, you do not have to repay the credit.

residence.

Line 3. See Who Can Claim the Credit on page 1 to find

Qualified official extended duty. You are on

out if you can claim the credit as a first-time homebuyer

qualified official extended duty while:

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or a long-time resident.

Serving at a duty station that is at least 50 miles from

your main home, or

Line 4. If two or more unmarried individuals buy a main

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Living in Government quarters under Government

home, they can allocate the credit among the individual

orders.

owners using any reasonable method. If married

You are on extended duty when you are called or

individuals buy a main home and do not claim the credit

ordered to active duty for a period of more than 90 days

on a joint return, they can also allocate the credit

or for an indefinite period.

between them using any reasonable method. A

reasonable method is any method that does not allocate

Lines 13a, 13b, and 13c. See item 9 under Who

any part of the credit to a co-owner not eligible to claim

Cannot Claim the Credit on page 2 for the definition of a

that part.

related person. If the person does not meet the definition

of a related person, that person is not related to you.

For first-time homebuyers, the total amount allocated

cannot exceed the smaller of $8,000 or 10% of the

If you sold your home to someone who is not related

purchase price. For long-time residents, the total amount

to you, complete Part V to figure the gain or (loss) on the

allocated cannot exceed the smaller of $6,500 or 10% of

sale.

the purchase price. For married taxpayers filing separate

Line 13d. See the Tip on page 3 for information about

returns, the amount of the credit allocated to each

converting your entire home to business or rental use.

spouse cannot exceed the smaller of (a) the amount on

line 3 or (b) the excess of line 2 over the amount

Do not check this box if you converted only a part of

the home to rental or business use and you continue to

allocated to the other spouse on the other spouse’s Form

use the other part as your main home. Do not file form

5405, line 4.

5405 for this conversion. If you purchased your home in

Line 5. Your modified adjusted gross income is the

2008, enter your annual repayment on your 2011 Form

amount from Form 1040, line 38, increased by the total of

1040, line 59b, or Form 1040NR, line 58b, whichever

any:

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applies.

Exclusion of income from Puerto Rico, and

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Amount from Form 2555, lines 45 and 50; Form

Example 1. You claimed the credit for a home you

2555-EZ, line 18; and Form 4563, line 15.

purchased in 2009. In 2011, you converted the basement

of your home for use as a child care business. You

Part III. Disposition or Change in Use

continued to use the rest of your home as your main

home in 2011. You do not have to repay any of the credit

of Main Home for Which the Credit

with your 2011 return or file Form 5405.

Was Claimed

Example 2. The facts are the same as in Example 1,

Complete Part III if you claimed the first-time homebuyer

except that you purchased the home in 2008. You are

credit on your original or amended 2008 or later return

required to repay at least 1/15 of the credit with your

and you disposed of the home or it ceased to be your

2011 return. You do not have to file form 5405. Instead,

main home in 2011. This includes situations where:

enter the repayment on your 2011 Form 1040, line 59b,

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You sold the home (including through foreclosure),

or Form 1040NR, line 58b, whichever applies.

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Instructions for Form 5405 (Rev. 12-2011)

Instructions For Form 5405 Draft - (Rev. December 2011) Page 4

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