First time home buyer tax credit pay back??
So, I have been asked this question recently and honestly, I didn't know an exact answer to it. I researched and this is what I find:
On National Association of Realtors website this question is answered:
Will the Tax Credit Need to Be Repaid?
No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount credit will be recouped on the sale. (http://www.realtor.org/home_buyers_and_sellers/2009_First_Time_Home_Buyer_Tax_Credit)
Ok, I guess this is a clear enough of an answer or is it? Because of the wording of this answer, "the full amount credit will be recouped on the sale", I asked my good friend and trusted real estate attorney Andrew Cookson for more information. He says the credit is not paid back at the time of sale since the real estate closing attorney is not responsible for verifying if the seller is subject to repayment. Also, it is recommended by him and I strongly do too for anyone who might have to sell within 3 years to check with their accountant. All the rules that applies to this recapture rule apparently have more conditions attach to it if one is forced to sell due to job transfer or making another purchase after the sale of subjected home.
Well, as you all know, Realtors are not financial advisers and or legal advisers. Please do check with your accountant on the matter so that you will not be surprised when Uncle Sam asks for his payback!