Information regarding the 2008 Form 5405, 

First-Time Homebuyer Credit 

Changes have been made to the first-time homebuyer credit by Public Law 

111-92, the Worker, Homeownership, and Business Assistance Act of 2009, 

which was enacted on November 6, 2009. As a result, this 2008 Form 5405 

can be used only for homes purchased before November 7, 2009, for which 

you choose to claim the credit for 2008. We will issue a new revision of 

Form 5405 soon. The new revision must be used for all homes purchased 

after November 6, 2009 (whether the credit is claimed for 2008 or for 2009) 

and for all claims on 2009 returns for homes purchased any time in 2009 or 

in 2010. 
OMB No. 1545-0074 First-Time Homebuyer Credit

Form 5405

© Attach to Form 1040

Department of the Treasury

Internal Revenue Service

Name(s) shown on return Your social security number

CN11880I F5405 (2008) (R22009)

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Part I General Information

Enter your modified adjusted gross income (see instructions)

Divide line 3 by $20,000 and enter the result as a decimal (rounded to at least three places).

Enter the smaller of:

3

Part II Credit

A Address of home qualifying for the credit (if different from the address shown on return)

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No. Skip lines 3 through 5 and enter the amount from line 1 on line 6.

Yes. Subtract $75,000 ($150,000 if married filing jointly) from the

amount on line 2 and enter the result

Is line 2 more than $75,000 ($150,000 if married filing jointly)?

1

2008

5 Multiply line 1 by line 4 5

6 Subtract line 5 from line 1. This is your credit. Enter here and on Form 1040, line 69 6

General Instructions

Section references are to the Internal Revenue Code.

Who Can Claim the Credit

In general, you can claim the credit if you are a first-time

homebuyer. You are considered a first-time homebuyer if:

● You purchased your main home located in the United

States after April 8, 2008, and before December 1, 2009.

Who Cannot Claim the Credit

1. Your modified adjusted gross income is $95,000 or

more ($170,000 or more if married filing jointly). See the

instructions for line 2.

b. A corporation in which you directly or indirectly

own more than 50% in value of the outstanding stock

of the corporation.

a. Your spouse, ancestors (parents, grandparents,

etc.), or lineal descendants (children, grandchildren,

etc.).

B Date acquired (see instructions)

C If you are choosing to claim the credit on your 2008 return for a main home bought after December 31, 2008, and before 

December 1, 2009, check here (see instructions) ©

● $7,500 ($8,000 if you purchased your home in 2009), but only half of that amount if married

filing separately, or

● 10% of the purchase price of the home.

If someone other than a spouse also held an interest in the home, enter only your share of this

amount (see instructions)

Do not enter more than 1.000 X .

Purpose of Form

Use Form 5405 to claim the first-time homebuyer credit.

The credit may give you a refund even if you do not owe

any tax.

For homes purchased in 2008, the credit operates

much like an interest-free loan. You generally must repay

it over a 15-year period. For homes purchased in 2009,

you must repay the credit only if the home ceases to be

your main home within the 36-month period beginning on

the purchase date. See Repayment of Credit on page 2.

● You (and your spouse if married) did not own any other

main home during the 3-year period ending on the date of

purchase.

If you constructed your main home, you are treated as

having purchased it on the date you first occupied it.

Main home. Your main home is the one you live in most

of the time. It can be a house, houseboat, housetrailer,

cooperative apartment, condominium, or other type of

residence.

You cannot claim the credit if any of the following apply.

2. You are, or were, eligible to claim the District of

Columbia first-time homebuyer credit for any tax year.

This rule does not apply for a home purchased in 2009.

3. Your home financing comes from tax-exempt

mortgage revenue bonds. This rule does not apply for a

home purchased in 2009.

4. You are a nonresident alien.

5. Your home is located outside the United States.

6. You sell the home, or it ceases to be your main

home, before the end of 2008.

7. You acquired your home by gift or inheritance.

8. You acquired your home from a related person.

A related person includes:

Attachment

Sequence No. 163

c. A partnership in which you directly or indirectly

own more than 50% of the capital interest or profits

interest.

(Rev. February 2009)
Amount of the Credit

Generally, the credit is the smaller of:

Form 5405 (2008) (Rev. 2-2009) Page 2

For more information about related persons, see

Nondeductible Loss in Chapter 2 of Pub. 544, Sales and

Other Dispositions of Assets. When determining whether

you acquired your main home from a related person,

family members in that discussion (except item 7) include

only the people mentioned in 8a above.

● $7,500 ($8,000 if you purchased your home in 2009),

but only half of that amount if married filing separately, or

● 10% of the purchase price of the home.

You are allowed the full amount of the credit if your

modified adjusted gross income (MAGI) is $75,000 or less

($150,000 or less if married filing jointly). The phase-out of

the credit begins when your MAGI exceeds $75,000

($150,000 if married filing jointly). The credit is eliminated

completely when your MAGI reaches $95,000 ($170,000 if

married filing jointly).

Repayment of Credit

Homes purchased in 2008. You generally must repay the

credit over a 15-year period in 15 equal installments. The

repayment period begins in 2010 and you must include

the first installment as additional tax on your 2010 tax

return.

If your home ceases to be your main home before the

15-year period is up, you must include all remaining

annual installments as additional tax on the return for the

tax year that happens. This includes situations where you

sell the home, you convert it to business or rental

property, or the home is destroyed, condemned, or

disposed of under threat of condemnation.

If you and your spouse claim the credit on a joint

return, each spouse is treated as having been allowed

half of the credit for purposes of repaying the credit.

Example 1. You claimed a $7,500 credit on your 2008

tax return. You must include $500 ($7,500 4 15) as

additional tax on your 2010 tax return and on each tax

return for the next 14 years.

Example 2. You claimed a $7,500 credit on your 2008

tax return. In 2009, you sold the home to your son. You

must include $7,500 as additional tax on your 2009 tax

return.

Exceptions. The following are exceptions to the

repayment rule.

● If you sell the home to someone who is not related to

you, the repayment in the year of sale is limited to the

amount of gain on the sale. (See item 8 under Who

Cannot Claim the Credit for the definition of a related

person.) When figuring the gain, reduce the adjusted

basis of the home by the amount of the credit you did not

repay.

● If the home is destroyed, condemned, or disposed of

under threat of condemnation, and you acquire a new

main home within 2 years of the event, you continue to

pay the installments over the remainder of the 15-year

repayment period.

● If, as part of a divorce settlement, the home is

transferred to a spouse or former spouse, the spouse

who receives the home is responsible for making all

subsequent installment payments.

● If you die, any remaining annual installments are not

due. If you filed a joint return and then you die, your

surviving spouse would be required to repay his or her

half of the remaining repayment amount.

Homes purchased in 2009. You must repay the credit

only if the home ceases to be your main home within the

36-month period beginning on the purchase date. This

includes situations where you sell the home, you convert

it to business or rental property, or the home is

destroyed, condemned, or disposed of under threat of

condemnation. You repay the credit by including it as

additional tax on the return for the year the home ceases

to be your main home. If the home continues to be your

main home for at least 36 months beginning on the

purchase date, you do not have to repay any of the

credit.

If you and your spouse claim the credit on a joint

return, each spouse is treated as having been allowed

half of the credit for purposes of repaying the credit.

Exceptions. The following are exceptions to the

repayment rule.

● If you sell the home to someone who is not related to

you, the repayment in the year of sale is limited to the

amount of gain on the sale. (See item 8 under Who

Cannot Claim the Credit for the definition of a related

person.) When figuring the gain, reduce the adjusted

basis of the home by the amount of the credit.

● If the home is destroyed, condemned, or disposed of

under threat of condemnation, and you acquire a new

main home within 2 years of the event, you do not have

to repay the credit.

● If, as part of a divorce settlement, the home is

transferred to a spouse or former spouse, the spouse

who receives the home is responsible for repaying the

credit.

● If you die, repayment of the credit is not required. If you

filed a joint return and then you die, your surviving spouse

would be required to repay his or her half of the credit.

Specific Instructions

Part I General Information

Line C. You can choose to claim the credit on your 2008

Form 1040 for a main home purchased after December

31, 2008, and before December 1, 2009. If you make this

choice, check the box.

Line B. Enter the date you acquired the home. This is the

date you purchased it (or the date you first occupied it if

you constructed your main home).

Line 1. If two or more unmarried individuals buy a main

home, they can allocate the credit among the individual

owners using any reasonable method. The total amount

allocated cannot exceed the smaller of $7,500 ($8,000 if

you purchased your home in 2009) or 10% of the

purchase price. See Purchase price on page 3.

Part II Credit

Note. A reasonable method is any method that does not

allocate all or a part of the credit to a co-owner who is

not eligible to claim that part of the credit.
Paperwork Reduction Act Notice. We ask for the

information on this form to carry out the Internal Revenue

laws of the United States. You are required to give us the

information. We need it to ensure that you are complying

with these laws and to allow us to figure and collect the

right amount of tax.

You are not required to provide the information

requested on a form that is subject to the Paperwork

Reduction Act unless the form displays a valid OMB

control number. Books or records relating to a form or its

instructions must be retained as long as their contents

may become material in the administration of any Internal

Revenue law. Generally, tax returns and return information

are confidential, as required by section 6103.

If you have suggestions for making this form simpler,

we would be happy to hear from you. See the instructions

for your income tax return.

The average time and expenses required to complete

and file this form will vary depending on individual

circumstances. For the estimated averages, see the

instructions for your income tax return.

Form 5405 (2008) (Rev. 2-2009) Page 3

● Amount from Form 2555, lines 45 and 50; Form

2555-EZ, line 18; and Form 4563, line 15.

● Exclusion of income from Puerto Rico, and

Line 2. Your modified adjusted gross income is the

amount from Form 1040, line 38, increased by the total of

any:

Purchase price. The purchase price is the adjusted

basis of your home on the date you purchased it. This

includes certain settlement or closing costs (such as legal

fees and recording fees) and your down payment and

debt (such as a first or second mortgage or notes you

gave the seller in payment for the home). If you build, or

contract to build, a new home, your purchase price can

include costs of construction. For more information about

adjusted basis, see Pub. 551, Basis of Assets.