Form 5405
Forms

Form 5405: Repayment of the First-Time Homebuyer Credit

Form 5405 is used to notify the IRS and figure the amount of the credit you must repay if you purchased a home in 2008 and met certain conditions in 2022, such as disposing of it or ceasing to use it as your main home. Exceptions apply.

What is Form 5405?

Form 5405 is an IRS form used to notify the IRS that you disposed of or ceased living in a home you purchased in 2008, for which you claimed the credit. This form requires you to calculate the amount of credit you must repay for the year 2022. You must file Form 5405 if you meet certain criteria, such as if you disposed of or stopped living in the home in 2022. Certain exceptions apply, like when the home is destroyed or transferred to a spouse or ex-spouse. Additionally, credit claimed on a joint return must be repaid by each spouse, but repayment of the remaining balance of the credit is not required if the person who claimed the credit passes away.

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IRS Form 5405 – Who Needs to Fill It Out?

Any person who purchased a home in 2008 and meets either of the following conditions must fill out Form 5405: they disposed of it in 2022; or they ceased using it as their main home in 2022. Exceptionally, those who owe installment payments for the credit they claimed for the home, and have owned and used it as their main home throughout 2022, are not required to file Form 5405. On the other hand, if the credit was claimed on a joint return, each spouse must file a separate Form 5405. In the case of death of a person who claimed the credit, the remaining balance of the credit may not need to be paid depending on the circumstances. Exceptions may also be made for those who sold or transferred the home to a spouse or if the home was destroyed or under threat of condemnation.

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Step-by-Step: Form 5405 Instructions For Filling Out the Document

Filling out Form 5405 is a simple process. Start by reading the General Instructions, as well as any Future Developments applicable, to understand current information related to Form 5405. The purpose of this form is to notify the IRS when a home purchased in 2008, for which you claimed a credit, is disposed of or ceases to be your main home. Depending on your conditions, you may need to complete Part I, Parts II and III, or enter the repayment amount on 2022 Schedule 2 (Form 1040). Exceptions to this repayment rule are discussed in detail. Additionally, information regarding “Related Persons” is included, addressing spouse, ancestors, descendants, corporations, and partnerships. Full details regarding each of these conditions are provided in the source text.

Below, we present a table that will help you understand how to fill out Form 5405.

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Information Required for Form 5405 Details
Form Purpose Purpose of Form 5405
Conditions and Exceptions When and how to complete the form
Related Persons Information regarding related persons
Full Details Complete details about form instructions

Do You Need to File Form 5405 Each Year?

If you purchased a home in 2008 and met either of the conditions of disposing it or ceasing to use it as your main home in 2022, then you are required to file Form 5405 with your 2022 tax return. Otherwise, you aren’t required to file the form, and can instead enter the repayment on your 2022 Schedule 2 (Form 1040), line 10. There are exceptions to this rule, such as if the home was transferd to your spouse or ex-spouse, or if a person who claimed the credit has died. Consult the instructions for more information about related persons.

Download the official IRS Form 5405 PDF

On the official IRS website, you will find a link to download Form 5405. However, to make it easier for you, we are providing the link in our article, which comes directly from the official irs.gov website! Click the link to download Form 5405

Sources:

https://www.irs.gov/forms-pubs/about-form-5405

https://www.irs.gov/instructions/i5405

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