1040-US: First-time homebuyer credit claimed by taxpayer and spouse for separate homes in prior year while unmarried; the taxpayer sold the home

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Question

Both the taxpayer and spouse claimed a first-time homebuyer credit for separate homes in a prior year while unmarried to each other. The couple married; the taxpayer has sold his principal residence and moved into the spouse's principal residence. How do I enter this in UltraTax CS?

Answer

UltraTax CS has data entry fields on Screen 5405. Use an additional unit if the filing status of the return is married filing joint.

Example: Jim and Connie both purchased separate homes and claimed a first-time homebuyer credit in 2008, while unmarried to each other. In 2017, they married each other. Jim sold his home on 4/4/17, and moved in with Connie. Jim is required to file Form 5405 for recapturing the credit, while Connie is required to file a separate Form 5405 to pay installments.

Data Entry for Jim: On one unit of Screen 5405, enter data for his home in the Address and City, State, zip code fields, and enter code T in the Owner of the home in which the first-time homebuyer credit was taken field. Selecting the T will identify Jim on the Form 5405 that is associated to the home that is being disposed. Enter data in these fields: First-time homebuyer credit taken, Tax year first-time homebuyer credit taken, Purchase price, Date acquired, Date sold or no longer used as principal residence, and Reason for disposition or change of main home. If data for Jim's home sale was entered on Screen Home, select the residence from the drop-down menu on the Transfer sale information for Screen Home field. UltraTax CS transfers the date former home was sold, selling price, and basis of home. Enter the Selling price and Basis of home (if different from the purchase price).

Data Entry for Connie: On another unit of Screen 5405, enter data for her home in fields in the General Information section: Address, City, state, zip code, Date acquired, and Purchase price fields. In the Form 5405 - Prior Year Credit Information section, enter data in fields First-time homebuyer credit taken and Tax year first-time homebuyer credit taken. Because Connie did not dispose of her home, no further data entry is needed.

UltraTax CS will complete 2 units of Form 5405. UltraTax CS enters the social security number on the Form 5405 that is associated with the taxpayer and spouse. In addition, because Connie did not sell her home, UltraTax CS completes a First-Time Homebuyer Credit Worksheet with the 15-year repayment schedule.

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

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