Tuesday Tax Time: Time To Pay Up

Remember?  Remember when the government coerced you to buy a house in 2008 to stimulate the economy?  Remember the $7,500 credit you got, and how ticked you were when everyone else waited and got an $8k credit?  And it was so bad because you have to pay your $7,500 back, and they get to keep their $8k.  Bites.

Well, that payback starts this year.  Did you forget?  Starting in 2010, you have to put $500 in taxes on your tax return for 15 years until you pay back the $7,500 to the government.

Details:

1.  Put this payback on your 2010 return (due by April 15, 2011),

2.  Use Form 5405 to give the government back their money – $500 per year,

3.  If you sell your home before the 15 years is up at a loss, the debt is forgiven,

4.  If you sell your home before the 15 years is up at a profit, you will be taxed on the lesser of your profit or the balance of the credit.

Have fun.

Thanks, Jason M. Blumer, CPA

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