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Tax.appeal.168
Tax.appeal.168, Tax Accountant
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Experience:  Nearly 30 years of varied tax industry exp. Tax Biz owner
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I am being forced to relocate 300 miles in California for my

Resolved Question:

I am being forced to relocate 300 miles in California for my job. I purchased a condo 24 months ago, and took advantage of the first time home buyers credit of $8000. Since my house is slightly worth less then what I owe, I have decided to rent it out instead of selling/shortsale, to save my credit.

Am I required to repay the IRS this $8k credit, even though I am being forced to relocate in order to save my job?
Submitted: 2 years ago.
Category: Tax
Expert:  Tax.appeal.168 replied 2 years ago.
Hello, THANK YOU for choosing Just Answer. My goal is to help make your life...a little...LESS taxing.

In order to NOT have to pay the credit back, the home would have to be your main residence for 36 months after the purchase date. I've been checking to see if there is an exception due to a job change, and I came up with nothing.
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Repaying the Credit

Q. When must I pay back the credit for the home I purchased in 2009?

A. Generally, there is no requirement to pay back the credit for a principal residence purchased in 2009 or early 2010. The obligation to repay the credit arises only if the home ceases to be your principal residence within 36 months from the date of purchase. The full amount of the credit received becomes due on the return for the year the home ceased being your principal residence.

Q. If I claim the first-time homebuyer credit for a purchase in 2009 or early 2010 and stop using the property as my principal residence before the 36 month period expires after I purchase, how is the credit repaid and how long would I have to repay it?

A. If, within 36 months of the date of purchase, the property is no longer used as your principal residence, you are required to repay the credit. Repayment of the full amount of the credit is due at the time the income tax return for the year the home ceased to be your principal residence is due. The full amount of the credit is reflected as additional tax on that year's tax return. Form 5405 and its instructions will be revised for tax year 2009 to include information about repayment of the credit.

Q. When does my home stop being my main home?

A. Here are examples of when your home stops being your main home:

You sell the home.
You transfer the home to a spouse or former spouse in a divorce settlement.
You convert the entire home to a rental or business property.
You converted the home to a vacation or second home.
You no longer live in the home for the greater number of nights in a year.
Your home is destroyed or condemned.
You lose your home in foreclosure.
You die. (1/6/11)

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You can refer to the following IRS webpage for further details:

http://www.irs.gov/newsroom/article/0,,id=206293,00.html

Tax.appeal.168, Tax Accountant
Category: Tax
Satisfied Customers: 2499
Experience: Nearly 30 years of varied tax industry exp. Tax Biz owner
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