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R. Klein, EA
R. Klein, EA, Enrolled Agent
Category: Capital Gains and Losses
Satisfied Customers: 263
Experience:  Over 20 Years experience in resolving tough tax cases
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I took out a homebuyer credit in taxes 2008. It was

Customer Question

I took out a homebuyer credit in taxes 2008. It was foreclosed in 2014. I don't know how to determine gain/losses....does the loan need to be paid back...re:form 5405
JA: The Accountant will know how to help. Please tell me more, so we can help you best.
Customer: there were two loans taken out for the home. the principal debt of loan A was 157,771. Loan B was 7,750. The 1099A shows a principal debt of 149,438.83 w/a FMV of 155,000 for loan A....for loan B it shows a principal debt of 7122.23 w/a FMV of 167,000.
JA: Is there anything else the Accountant should be aware of?
Customer: How is a loss/gain determined? And how does it apply to repayment of loan?
Submitted: 2 months ago.
Category: Capital Gains and Losses
Customer: replied 2 months ago.
The first figures regarding principal debt of loan A/B was when home was acquired in 2008. The 1099A info was for 2014.
Expert:  bkb1956 replied 2 months ago.

Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.

The exceptions to having to repay the 2008 first time home buyer credit are:

The exceptions where you may not have to repay the full credit are:

  • If you (transferor spouse) transfer your home as part of a divorce settlement, your former spouse (transferee spouse) who keeps the home is responsible for making the rest of the repayments and you are not responsible for making any remaining repayments.
  • If your home is destroyed, condemned or disposed of under threat of condemnation and you purchase a replacement home within two years, you continue to repay the credit in installments each year.
  • If you lose your home in a foreclosure sale, you repay the credit only up to the amount of the gain.
  • If you die, no further repayments are due. If you claimed the credit on a joint return, your surviving spouse pays only his or her half of the remaining credit repayment amount.
  • If you sell your main home to an unrelated person or entity, you repay the credit only up to the amount of gain, if any, on the sale. Note: when calculating gain or loss on your main home if you received the credit, you reduce your basis by any remaining amount of the credit. See Publication 551, Basis of Assets, for more information.

https://www.irs.gov/uac/first-time-homebuyer-credit-questions-and-answers-homes-purchased-in-2008

If you had no gain, the credit does not have to be repaid.

My best advice would be to visit a tax professional so the "sale" is reported correctly.

Please let me know if I can assist you further.

Thank you and best regards,

Barb

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