Repayment rules and calculations related to the First-Time Homebuyer Credit can be confusing. If you received this credit in 2008, 2009 or 2010, you should review these rules to see whether they apply to you before you file your 2011 taxes. 

One of the reasons why these calculations are confusing is that you are allowed to choose the year in which you apply the credit, even if it means that you amend your previous year’s return. In addition, multiple changes were made to the law by Congress while the credit was available. This means you would have seen the results of the credit as either a reduction in the amount of tax you owed or as an increase in your refund. 

Did you receive a repayment notice from the Internal Revenue Service (IRS)? This may have added another layer of confusion, since many of these notices were inaccurate. In fact, some taxpayers were told they needed to repay when they in fact they did not.

Did you received the First-Time Homebuyer Credit, but have since sold your home, or changed how our home is being used? If so, or if you are confused for another reason, you may want to consider working with a CPA to determine what you need to do.

Here are some of the main reasons why you would need to repay up to the full amount you received under the First-Time Homebuyer Credit:

• The primary residence you purchased in 2009 or 2010 was sold for a gain within 36 months. 
• The home you purchased as a primary residence in either 2009 or 2010 was converted to a rental or a business within 36 months. 
• Your home was purchased in 2008 as a primary residence and sold within 15 months. 
• Your home was purchased in 2008, 2009 or 2010 but was destroyed or condemned and you did not rebuild it or buy another primary residence within two years. 

If you received the First-Time Homebuyer Credit, the IRS will send you an annual notice (it will either be called are Notice CPO3a, Notice CPO3b or Notice CPO3c) advising you about what you owe or under what circumstances you would be required to repay the credit. Repayment is made by filing Form 5405 with your federal income tax return.