Chapter 7 and the 2008 First Tme Homebuyer Credit

[sage]

Hi All, long time lurker, first time poster. I filed Chapter 7 at the end of 2019, had the 341 last month, and its set to be discharged at the end of March. Despite researching and speaking with my lawyer, I still can’t find a decent answer on how the IRS 2008 first time home buyer credit ($7500 credit, repay $500/yr for 15 years) is handled during and after a Chapter 7. The debt was listed by my lawyer as a Non-Priority, Unsecured debt, and therefore should be discharged along with the rest of them. I am still living in the home as my primary residence and I reaffirmed the mortgage.

My question, how do I report this on tax forms? Do I simply ignore Form 5405 where I’m supposed to capture the repayment as it no longer applies? Since I filed at the end of 2019, is the $500 payment due on my 2019 taxes? Or will I have to wait until 2020 to omit the repayment? Before I seek out help from an accountant, I wanted to see if anybody had run into this situation and how it was ultimately handled. There is literally no information out there about this topic.

Thanks!

[justbroke]

Show this to your attorney: https://www.nacba.org/debtors-obliga...argeable-debt/

It's a NACBA article about this recapture of the credit. Have them look at In Re Betancourt, 582 B.R. 480 (2018) where the judge. But also see In re Bryan, Bankr. N.D. Cal, 2/17/14, where the judge agreed with the IRS.

Despite the ruling in Bryan, the Betancourt court found that Bryan was unpersuasive. In the long run, there's not a lot of authority on this matter, but the Betancourt case seems to be compelling. In the end, the recourse may be to call the IRS Insolvency Department and ask them how they are treating this discharged debt. Then go back to your attorney to figure out if you want to fight the IRS' classification, if they claim it to "not" be discharged or dischargeable.