1040-US: First-time homebuyer credit claimed in prior year but sold home

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Question

The taxpayer claimed and received the First-time Homebuyer Credit in the prior year, but sold the home in 2018. How does UltraTax CS report the credit repayment?

Answer

During the proforma process, UltraTax CS reports the amount of credit received on the First-time Homebuyer Credit taken field in Screen 5405.

  • If the taxpayer is not a proforma client, enter the amount of the first-time homebuyer credit in the First-time homebuyer credit taken field.
  • Enter the date sold in the Date sold or no longer used as principal residence field.
  • Enter a reason from the drop-down list in the Reason for disposition or change of main home field.
  • Enter basis on the Basis of the home field, if different from the purchase price.
  • Enter the selling price in the Selling price of home field.

UltraTax CS calculates Form 5405 Parts I and II. If there is a credit repayment on Form 5405, line 10, UltraTax CS reports the amount on Form 1040, line 60b.

Note: There are reasons for disposition or change of main home that will not generate a repayment of credit. See the Form 5405 filing instructions for more information. Homes purchased in 2008 are subject to a 15-year repayment of the credit taken. UltraTax CS will proforma the credit taken for this repayment period if the home is not sold or no longer used as the principal residence. Homes purchased in 2009 or later are subject to repayment if the home is sold or no longer used as the principal residence for less than 36 months after the purchase date. UltraTax CS will proforma the credit taken for this repayment period as well.

Related topic: First-time homebuyer credit FAQs (1040)

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