1. Home
  2. Blog
  3. Taxes
  4. Repaying the 2008 First-Time Home Buyer Tax Credit
Couple sitting in kitchen

If you were a first-time home buyer between April 8, 2008 and January 1, 2009, you might recall taking advantage of The Housing and Economic Recovery Act of 2008 that allowed eligible homeowners to utilize an interest-free loan equal to 10% of the purchase price of a home (up to $7,500).

The First-Time Homebuyer credit was an incentive by Congress to boost housing sales in a time when the Great Recession made it difficult to purchase a home. Those who took advantage of the credit are required to repay the government in equal installments over 15 years for the amount received.

If you’ve started paying the piper in the form of your tax returns, we’ve got everything you need to know about repaying the 2008 credit.

How Do I Repay the Credit?

Essentially, if you claimed and received the one-time credit on your income tax return for 2008, you must repay the credit. It is repaid as an additional tax on your tax return, and you’ll be paying it back every year for a total of 15 years.

To clarify, if you qualified for the maximum credit of $7,500, this means you’ll pay a yearly loan payment of $500 until the loan is repaid in full.

One way to ensure you can afford to pay the credit every year is to list an additional withholding in your paycheck. If you get paid biweekly, you can ask your employer to withhold an additional $20 per pay period, adding up to an extra $520 at the end of every year – a little more than you’ll need for the repayment on a loan for the full credit amount.

When you’re making a first-time home buyer credit repayment, you’ll use a 5405 tax form, adding the amount you have to repay to any other tax you owe on your federal tax return. There are special rules for repaying the credit if the home stops being your main home. We’ll talk more about that later.

How Do I Know How Much I Owe on My Tax Credit?

If you’re looking for the remaining balance of your tax credit, visit the First Time Homebuyer Credit Account Look-Up to retrieve the balance of your credit.

You’ll also be able to view the amount you paid back to date, as well as the total amount of the credit you received.

In order to review your tax credit information, you’ll have to provide the following:

  • Social Security number or Individual Tax ID Number (ITIN)
  • Date of birth
  • Street address
  • ZIP code

What If I Miss a Tax Credit Repayment?

If you don’t pay your first-time home buyer tax credit, it’s essentially as serious as not paying your income tax and is handled accordingly by means of added interest or possible penalties.

Long story short: Don’t miss a payment.

Do I Need to Repay the Credit If My Home Stops Being My Primary Residence?

If your home remains your primary residence, you are required to repay the credit in equal payments over 15 years with no interest charged.

However, if you move or sell the home, it will no longer be considered your main home. You may need to repay the entire unpaid credit in one lump sum.

According to the IRS, a home is no longer considered your main home when:

  • You sell your home
  • You transfer the home to a spouse or former spouse in a divorce settlement
  • You convert the entire home to a rental or business property
  • You converted the home to a vacation or second home
  • You no longer live in the home for the greater number of nights in a year
  • Your home is destroyed or condemned
  • You lose your home in foreclosure
  • You die

If the home is no longer your main home, you must repay the entire remaining part of the credit on your next tax return. The only exception is if your home is destroyed or condemned and you buy a replacement home within two years; then, you can continue to repay the credit in annual installments.

How Can I Get Out of Repaying the 2008 Credit?

Unfortunately, there aren’t a lot of options for getting out of it. Here are the only listed exceptions to not having to pay the credit back in full:

  • You get a divorce and your ex-spouse gets the house. You don’t have to pay it back, but your ex-spouse does.
  • If you or your spouse is in the military and your house was sold due to service-related relocation, you don’t have to repay the credit.
  • If you lose your home in a foreclosure sale, you repay the credit only up to the amount of the gain.
  • If you die. However, if you claimed the credit on a joint return, your surviving spouse pays only his or her half of the remaining credit repayment amount.

As you can see, there’s not much you can do to get out of repaying the tax credit. The best thing you can do is just make sure you’re making the payments every tax season until the full amount is repaid.

Is It Possible to Repay Only a Portion of the Tax Credit?

While it’s harder to get out of paying back the tax credit altogether, there is a way that you might only have to repay a portion. Let’s dig in.

If you sell your main home to an unrelated person or entity, you repay the credit only up to the amount of gain on the sale.

Let’s say the purchase price of the house was $200,000. You subtract the amount of the tax credit (let’s say $7,500), to get your net cost of $192,500. Any money gained from the sale of the house (difference between the sale price and your net cost) is what you’ll be responsible for paying back.

So, if you sold your house for $195,000, you’d be responsible for paying back $2,500 total ($195,000 minus $192,500). That’s a little better than the full $7,500.

How Do I Claim the Credit on Tax Returns?

In order to claim this tax credit on your tax returns, you must:

  • Use IRS Form 1040 to claim the credit
  • Attach IRS Form 5405
  • Attach documentation showing the purchase of the home between the applicable dates
  • File a paper, not electronic, return

Additionally, you must attach your regular wage tax statement (W-2, W-2G or 1099-R, as applicable) and mail to the appropriate IRS office.

Do you have any questions about the tax credit? Let us know in the comments below!

This Post Has 65 Comments

  1. I was on a monthly payment plan with the IRS for about 4k around 2009. When I bought my home in 2010 I figured it would repay that and they would owe me. When I spoke to the IRS they stated I still owed and that my credit was applied to my account. I asked a simple question as to what my balance was before the credit. And what was my balance after the credit was applied. They could not give me a dollar amount or the date only what I owed. To be honest I just quit filing taxes for the next 10 years regardless if they owed me or vise versa. I have filed 2018,2019,2020 and have gotten less money back. But I should be straight with them. (I think). When I use FTHC tool it shows:

    Original credit amount: $8,000

    Total Amount of Credit Repaid Per Reported Disposition: $0

    If I remember correctly I bought my home when the credit didn’t have to be paid back.

    I cant go that far back to look at my online transcripts to see if it was applied or used. The credit is showing in the tool.

    How can I see if the credit was applied? And if it wasn’t can I still get it? Would I have any grounds to stand on if they lied to me on the phone?

    1. Hi Brian:

      In general, if your home was purchased in 2010, you don’t have to pay back the credit. There are certain exceptions that may apply, so check out the official guidelines. In terms of whether it was applied, you may be able to order your tax transcripts from the IRS, but I would speak with a tax preparer. In terms of legal action, you would need to talk to an attorney.

  2. What if we had our home taken by the bank and we were never behind on a payment in2008-2009 is there anything we can do at this time

    1. Hi Brett:

      Whether you are eligible to get a new mortgage depends upon how long it has been since the foreclosure and the type of loan you’re looking to apply for. If you’re eligible for a VA loan, you can get one as little as 2 years after the foreclosure date. The FHA has a 3-year wait. Other options have a 7-year waiting period. If you would like, you can get started online or give us a call at (800) 442-4383. Thanks for reaching out!

  3. If you haven’t been making payments, they will charge a massive amount of interest and penalties, I am talking double if not more.

  4. Do anyone know who can I call about fradulent. Someone used my name to get a first time home buyer credit in my name and has a house in my name. I called the credit bureau but they couldn’t find anything. I called the IRS they just told me to file a fraudulent claim.

  5. Say, I bought a house in 2008, then sold it in 2010 because of active duty. I do not remember if I were/ weren’t claim the First Time Home Buyer Credit program. However, in each year after filed the tax return, there was a question about the First Time Home Buyer Credit,…how do I check if I ever use the program? After I retired from the service, I wanted a home, may I use the program without knowing using it before?

    1. Hi Ome:

      Thank you for your service! I think they easiest way to know if you took the credit is to see if you owe anything. That’s really the only obligation you would have. The IRS has a tool for checking on any repayment necessary. Before using it, I would check the questions and answers, which you should find on the same page. I hope this helps!

  6. I have a question, we are behind in filing a few years. I know its going to be a nightmare to do the late years. My husband took the house as his deduction since we were not married yet and I already had bought a house so it wouldn’t be my 1st home. I was wondering if he could do an amended return for 2008 and 2009. Remove the tax credit on the 2008 return and take the credit on the amended 2009 tax return. Then he wouldn’t have to pay the credit back since the people who took the credit in 2009 their credit was forgiven. What do you think? Is this possible to do?

  7. Yes, I don’t work any more am now permanent disabled so don’t file taxes but I owe this what can I do I don’t get much money and had to have my mortgage and taxes lower to remain in the home what can I do.????

    1. Hi Karen:

      That sounds like a very difficult situation, but I recommend you reach out to the IRS and see if you have any options. You can get in touch with them at (800) 829-1040. I wish you luck!

  8. We bought a house in 2008 for 234,000 and took advantage of the 5000 tax credit offered. We have been paying a back 500 on our taxes since we were supposed to. We bought a new house last year and currently are looking at selling the house we bought for 234 for only 175 as that is the current market price. We are losing a lot of money obviously. So, my question is …. do we still have to pay back the rest we owe or since the house will be selling for 59K less than what we bought it for will they forgive the outstanding portion?? Thanks so much!!

    1. Hi Sharon:

      The IRS has a tool for this that you might find helpful. That should give you a better answer. However, I will say that your situation doesn’t appear to match any exemption rules.

  9. My ex-husband and I got and i guess received this in 2008 when we went to buy our first home(total buying price for this house was to be $5,000.00 and was only gonna be $500/month for 10months). The things is we never bought the house because my ex got injured at work and we could not make half of the last months rent in time even and previous owner told us to move out if we couldn’t pay it then and there. So we moved. So I was wondering how/why they are making us repay of we legally never owned the house and we didnt get any kind of gain from her when she sold it to someone else for from 2008 till 2012 my ex and I filled jointly and they took a payment if not all the refund and after we divorced they took my whole 2013 return. And once again now that I’m married to someone completely different they have rejected or 1st taxes filing joint together. What all can be done and can we get our money pack from overpaying.

    1. Hi Ashley:

      The purpose of the tax credit was to buy the house, so if you got the credit and never actually bought a house, you would have to pay it back. I’m not familiar with whether there would be any sort of penalty that might add to the payment if you didn’t buy the house, but being that you’re having these issues, I think it would be best to speak with a tax professional or a CPA and really go over your situation with them.

  10. My question is how do we pay the credit off in full? My husband and I took the credit on a home purchased in 2008. My husband is now disabled and because I now have 3 disabled individuals to take care of, I MUST quit working. We have the funds to pay the credit in full and we want to do that so we don’t have to be doing the yearly installments. How do we do that? We will not be able to afford to do yearly payments anymore and using money we have on hand to pay it off in full would be a wise solution in our situation.

    1. Hi Becky:

      According to this info from the IRS, there’s nothing that would stop you from paying back the full amount of the credit as long as it was filed with form 5405 and a tax return. I’m sure you could even file an amended return and pay it back in full this year if you wanted to. I hope this helps!

  11. If I do a cash out re-fi on my loan that had the 2008 first time home owner’s tax credit does it just roll over to the new loan if I keep making the payments every year?

    1. Hi Linda:

      The credit is tied to the home itself and not the loan, so everything continues as normal. Hope this helps!

  12. another way our gov… screws its people…. i was told it was not to be repaid… so i did take it… then in 10 when i did my taxes … it took out the 500…. WHAT… why was only one year targeted… before and after 08 they did not have to repay…. been fighting this for all these years….

  13. I received the first time home buyer tax credit for purchasing my home in 2008. I’ve been on Social Security Disability since 2005. Before the first time home buyer credit, I no longer had to file a tax return after becoming disabled. I, of course, have had to file every year since receiving the credit to pay it back in the $500 increments. My question is, being on disability, and not having to normally file a regular tax return, is there a simpler way to repay the credit so I don’t have to go through the hassle of a tax return filing?

    1. Hi Erica:

      I can certainly understand not wanting to go through the hassle. Unfortunately, information from the IRS states that you have to file a tax return in order to repay the credit. Specifically, see the following quote: “If required to repay the first-time homebuyer credit, you must file a federal income tax return, even if the gross income doesn’t exceed the return filing threshold.” I’m sorry, but I hope this helps.

    2. I hear me too but I don’t have the income to pay at all am barley getting by really and not much after all bills and all and had to get on Medicaid top ay for my doctor appoints now so really

    3. Give the IRS a call, I had a similar situation, I do not file a yearly tax return, I set up a repayment plan with them, I have been using PayUSA tax monthly, down to the wire now, will be complete April 2022, thanking every God known to mankind.

  14. Bought a town home 2008 received loan. Sold the town home for less then I bought it for by 4500$. Can I subtract the 4500 off what is left of
    the loan? Being that I lost money on the sale.

    1. Hi Patrick:

      Unfortunately, you have to pay off the full loan. You’re responsible for it. However, I would talk to a tax advisor because one thing you might be able to do is write off the loss on the sale of the house.

  15. My ex and I purchased a home in 2008. We divorced in 2009 and I got the house. Per our divorce decree I was to pay back the full $500 each year which I have been but I am filing my taxes now and it says I can’t pay towards it
    I checked my credit and it says I’ve paid my portion and can’t pay anymore. The IRS thinks he still owes his so even tho over been paying mine and his, they think I only owed half the $7500 and that I’m done paying.

    What do we do? It seems like he should have filed form 5405 to stop it noting as his home but it doesn’t look like he ever did that. I have no way to get a hold of him.

    What do we do?

    1. Hi Cally:

      That would seem to be an unusual situation. Although we give general advice, individual tax scenarios are better left to a tax professional or accountant. Given your situation, I think that might be the best route. You could also try calling the IRS and seeing what their guidance would be. That number is (800) 829-1040. Good luck!

    1. Hi Courtney:

      The repayment on the tax credit is supposed to be interest-free, according to IRS documentation. There are limited circumstances where you would owe the balance of the credit on your tax return if you sold the home and it was no longer your primary residence, for example. Here’s the IRS page on the credit. If you can’t find the answer that applies to you there, I recommend speaking with a tax professional.

  16. Hi I just filed my taxes electronically and the lady who prepared my taxes showed that the form 5405 was showing I must pay 533.00. I thought this credit was tax free. I believe I have been paying 500.00 for the last 8 years.

    1. Hi Regina:

      If you mean the tax credit, you would have to find that out through the IRS. Their number is (800) 829-1040. I hope this helps. I’m sorry to hear about your husband.

  17. You said if you sell the house you only have to pay back up to the amount gained on the house. Does that gain include realtor fees?

    Say you bought a house for 100,000 in 2008 and received the 7,500 tax credit making the basis for the house 92,500. Then you sell your house in 2019 and have paid back 4,000 if the 7,500. Would the basis for the house increase to 96,500 or stay at 92,500? Would the realtor fees reduce the calculated gain on the house?? What about expenses incurred in order to sell the house like buying a home warranty or a paint and carpet allowance given to the buyers?

    1. Hi Anna:

      Every situation is different and we recommend you speak to a tax advisor about this. You can also contact the IRS at (800) 829-1040. Thanks!

  18. In 2008 I had a house under land contract and when I filed my taxes, the tax preparer put that credit on my tax return. …was that legal and I lived there for a year before it went back to the holder of the land contract

    1. Hi Sir:

      I think you’d better talk to an accountant or someone specializing in tax law. Under a land contract, you don’t own the house right away. In fact, you never owned it. I would talk to a tax professional about what qualifies for the credit. You could also talk to the IRS at (800) 829-1040.


  19. I purchased a home in 2008. Had a two different CPAs do my taxes over the past ten years. They didn’t ask and I completely forgot about this credit. Not sure if I even knew it had to be repaid, idk. This year I bought TurboTax and that question was on there. I couldn’t remember but the link said I did get like $3200. The IRS never said anything. I totally forgot. CPAs didn’t mention it. Now what do I do? Planning on selling it this year. Thanx

    1. Hi Jody:

      I really think it’s best if you talk to a tax advisor or the IRS. You can get in touch with them at (800) 829-1040.


      1. If you haven’t been making payments, they will charge a massive amount of interest and penalties, I am talking double if not more.

  20. Me and my ex husband received the first home buyer tax credit. We are now divorced and he kept house and has since refinanced it and took my name off. He pays the 500 payment every year but when I file my income tax it keeps showing up I owe it. How and who can I contact so it will not effect me anymore??

    1. Hi Robin:

      I would advise contacting the IRS and seeing what you have to file to show you’re not on the loan or the title anymore. The individual phone number for the IRS is (800) 829-1040.

      Kevin Graham

  21. I moved out of the home in 2014. Some how I was able to continue to pay the 500 dollars for two years. I am paying the remaining balance of 3500 dollars this year. Are they going to hit me for interest??

    1. Hi Joseph:

      That’s a good question, but one I cannot answer. I would talk to a tax professional about this one in and see how this normally works. I wish you luck!

      Kevin Graham

    1. Hi Sam:

      We aren’t tax professionals. However, I can suggest you get in touch with the IRS at (800) 829-1040. They would be able to answer any questions you might have.


  22. Here is our situation. We bought a house and received the First Time Homebuyer credit in 2008. We sold the house in 2016 and owed $2922 of it after filing our taxes. We are paying in monthly installments. I just filed our 2017 tax return and we are supposed to receive a $4000 refund. Will the IRS tax the rest of what we owe from the 2017 return?

    Also, I logged on to figure out how much we still owe on the credit. The information was confusing. The last statement says “Total balance left to be paid: $-780”. It makes me think that we overpaid but I cannot see how that could have happened. Any insight here?

    1. I’m not a tax preparation expert, but if you did still have to pay money back, it makes sense to me that this would be taken out of any applicable refund. However, a negative balance does make me think you should be getting money back. I would talk to someone that does this for a living to be sure.


  23. Here’s my situation. My ex-husband and I purchased a home in Dec. 2008 (literally 5 days too soon to not pay back this thing).

    We have now been divorced for 4 years, and I remarried, moved, and now rent out the home.

    In the divorce I got the home, and he got our other rentals. But I’ve never been able to get the house in my name- it is still listed in both our names. He is the primary borrower on the loan and listed first on the deed. We did our own divorce and nothing is in writing saying I have to have the home in my name only.

    Now, I need to pay 4k to pay the remainder of the first time home buyer credit. (I’ve paid the 500 by myself for the past 4 years).

    Since he is still legally an owner, does he owe half the 4k? And does he also need to back pay me half of the 2k I’ve paid for the past 4 years?

    I’ve already paid the taxes, but our CPA made a mistake and we must amend the return, so I thought maybe he could change the payment of the tax credit in the same amendment (assuming that my ex-husband does have to pay half).


    1. That would be between the two of you. Since you have no formal arrangement regarding the divorce, you would have to work it out with him. Since you are both on the title, that’s one way of doing it.

      Kevin Graham

  24. I just sold my 2008 purchased home recently. Aprox. 2 years after the purchase I became disabled and began to collect disability payments. I managed to keep the home by juggling money and selling my beloved mechanic tools. The home was a show place. A diamond in a goats ass I guess you could say considering the development it was located. I needed to make it a showplace in order to sell it to cover the years I was moving from one credit card to another to fix it up and just afford to keep the lights on. I sold it for much more than the original purchase price and almost enough to pay everything off. I just did my taxes and have to pay back almost 3 grand on the “FIRST TIME HOME BUYERS TAX CREDIT”. Lovin it. Anyone think a nice letter to the IRS asking for more time to pay would help? Has anyone just tried to ask for a loan extension from them rather than just crying about why do we have to pay it cause they didn’t. I know I sound ruff but hey, A DEAL IS A DEAL and we made it.

    1. Hi Kevin:

      Sounds like you’re in a tough spot. Unfortunately, the best advice I can give you is to contact a tax adviser. Good luck!

      Kevin Graham

      1. My question is, when I get a refund on my taxes, can that go to pay the $500?? I am self employed. I am a Courier. I drive about 60,000 miles a yr. I write those miles off and always never owe any federal taxes, I always have a plus. I don’t get the plus money refund, but if I did owe the IRS, it can go towards what I owe. But my tax lady says, even though I show a plus on my taxes, I cannot use that to pay on my first time buyers loan. She said it’s a loan, not taxes I owe. But when I get my paper from the IRS, it says ” I didn’t pay the additional federal tax i owe”. I called the IRS and asked them, the lady could not answer my question. But she did say, she did not see any difference. If I owe, I should be able to use my plus “refund” to pay. She connected me the the “accounts” dept and when they finally answered, the call hung up. Now I have no clue who to call. It’s so hard to get through to anyone there. Any help would be greatly appreciated. Thank you. Randy.

        1. Unfortunately, I’m not that familiar with tax law to be able to tell you the difference. I would get a second opinion from another accountant. That being said, you’re going to get a refund check back and if you were to send the money right back to them, I have a feeling they wouldn’t care where it came from.

  25. Any updates or progress in Washington on this silly rule that punishes 2008 homebuyers, but not 2009 or 2010 homebuyers when the house is sold in 2015?

  26. I bought my first house in Oct, 2008. No one told me about the payback…..realtor, lender, friend, neighbor….no one. I was 61 years old at the time and bought a “repo” that needed a LOT of work, which I took advantage of the credit for. I’m almost 66 now…out of work….Social Security will start for me at 66. Where in the world am I going to find that payment every year? THAT LOAN may just cost me the house eventually. Maybe I should change my citizenship to that of a third world country……the USA would certainly help me out then!!!

  27. I currently as of 2-24-12 have a petition online to be signed to “Abolish the first time home buyers tax credit payback of 2008” Please direct people to facebook for the petition. It will go to Washington as soon as I have 50 votes and I have nearly 40 now. This concerns myself and t housands of people who are being treated unfairly with this “credit”. Also you can find the petition on No Labels.com. Thank you

Leave a Reply

Your email address will not be published. Required fields are marked *