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Wendy Reed
Wendy Reed, Enrolled Agent
Category: Tax
Satisfied Customers: 3346
Experience:  15+ years tax preparation and tax advice.
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I was single when I took the 7500 tax credit. I got engaged

Resolved Question:

I was single when I took the 7500 tax credit. I got engaged a year later and my fiance also has the credit. When we get married and move into one house or the other, does the home we do not choose to live in have to repay the entire credit in the next tax season? Seems like a trap. We can't just dish out 7500 out of pocket.
Submitted: 5 years ago.
Category: Tax
Expert:  Wendy Reed replied 5 years ago.

Thank you for giving me the opportunity to assist you. I will give the best answer that I can with the information provided.


Hello there,

Unfortunately yes, that is what they expect, and it is a trap--but think of it this way, if you were married and purchased two homes, you would have only been eligible for one $7500 credit.


There are several exceptions to paying the credit back all at once, such as death, divorce, military orders, etc. But none that applies to your situation.


The rule for the 2008 credit was that if you stopped using the home as a main home, the entire balance of the credit (amount unpaid) would become due that tax year. Involuntary conversions are condemnation, disaster---or something like that, not a change in marital status.


Hopefully, if you sell one home, you may have the money to pay the credit back. If you sell the home at a loss--you may not have to pay the credit back at all, since the credit payback will be limited to the amount of gain on the sale.


Please let me know if you need further assistance.

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