Homebuyers begin to repay tax credit

Most homebuyers who claimed the federal tax credit of up to $7,500 for buying their first home in 2008 are required to start repaying the credit in 15 annual installments, beginning with their 2010 tax returns, according to the National Association of Homebuilders. The credit — which was offered for qualified home purchases in 2008, 2009 and 2010 — has different repayment rules depending on when the home was purchased and as tax season approaches, this may cause confusion. “It is important that homebuyers consult a qualified tax professional to make sure they are receiving all the tax benefits as well as fulfilling the obligations of their home purchase,” said Bob Nielsen, chairman of the NAHB and a home builder from Reno, Nev. The Internal Revenue Service is sending a letter to taxpayers who claimed the credit that explains the repayment options. The credit for homes purchased in 2009 and 2010 does not have a repayment requirement unless the home ceases to be used as the taxpayer’s principal residence within three years of the purchase. The homebuyer tax credit program expired for the majority of Americans in 2010, with some exceptions, such as service members who were on duty. TRD