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Who Cannot Claim the Credit

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

jointly).

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

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

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

on page 4.

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

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

What To Attach to Your Return

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

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

See the instructions for line 5 on page 4.

amended tax return, you must attach the following

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

documentation regarding your main home (as

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

applicable). If you do not attach the documentation,

tax return.

the credit may not be allowed.

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

on the date of purchase.

Attach a copy of your settlement statement showing all

5. You are a nonresident alien.

parties’ names and signatures, the property address, the

6. Your home is located outside the United States.

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

7. You sell the home, or it ceases to be your main

cases, your settlement statement is your properly

home, before the end of the year in which you purchased

executed Form HUD-1, Settlement Statement. In

it. This rule does not apply if you or your spouse are, or

locations where the signatures of the buyer and seller are

were, a member of the uniformed services or Foreign

not required, the IRS encourages the buyer to sign the

Service or an employee of the intelligence community on

settlement statement before attaching it to the tax

qualified official extended duty as defined in the

return—even if the settlement statement does not

instructions for line 12 on page 4 and you sell the home,

include a signature line.

or it ceases to be your main home, after 2008. You can

If you are unable to obtain a settlement statement

claim the credit on the return for the year of purchase or

because you purchased a mobile home, attach a copy of

choose to claim it on your return for the year before the

your executed retail sales contract showing all parties’

year in which you purchased the home if you otherwise

names and signatures, the property address, the

qualify for the credit.

purchase price, and the date of purchase.

8. You acquired the home by gift or inheritance.

9. You acquired your home from a related person.

If you are claiming the credit for a newly constructed

This includes:

home and you do not have an executed settlement

a. Your spouse, ancestors (parents, grandparents,

statement, attach a copy of your certificate of occupancy

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

showing your name, the property address, and the date

b. A corporation in which you directly or indirectly own

of the certificate.

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

Additional documentation. You should also attach the

corporation.

following documentation, if applicable, to avoid delays in

c. A partnership in which you directly or indirectly own

the processing of your return and the issuance of any

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

refund.

For more information about related persons, see the

•

If you checked the “Yes” box on line C (or the box on

discussion under Nondeductible Loss in Chapter 2 of

line D and you purchased your home after April 30,

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

2011), attach a copy of the pages from a signed contract

determining whether you acquired your main home from

to make a purchase showing all parties’ names and

a related person, family members in that discussion

signatures, the property address, the purchase price, and

include only the people mentioned in 9a above.

the date of the contract.

10. You acquired your home from a person related to

•

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

your spouse. This includes your spouse’s ancestors or

the same main home, attach copies of one of the

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

following: Form 1098, Mortgage Interest Statement (or

your stepchildren), and any relationships described in 9b

substitute statement), property tax records, or

or 9c above that your spouse has.

homeowner’s insurance records. These records should

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

Amount of the Credit

the purchase date of the new main home.

First-time homebuyer. Generally, the credit is the

Repaying the Credit (for Purchases

smaller of:

After 2008)

•

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

•

10% of the purchase price of the home.

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

Long-time resident of the same main home.

use it as your main home for at least 36 months

Generally, the credit is the smaller of:

beginning on the purchase date, you do not have to

•

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

repay any of the credit or file Form 5405 again.

•

10% of the purchase price of the home.

You generally must repay the credit if after the year for

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

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

definition of purchase price.

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

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

beginning on the purchase date. This includes situations

amount of the credit if your modified adjusted gross

where you sell the home, you convert the entire home to

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

business or rental use, the home is destroyed,

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

condemned, or disposed of under threat of

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

condemnation, or the lender forecloses on the mortgage

filing jointly). The credit is eliminated completely when

or repossesses the home.

-2-

Instructions for Form 5405 (Rev. 12-2010)

Draft Instructions For Form 5405 - First-Time Homebuyer Credit And Repayment Of The Credit - 2010 Page 2

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