Chapter 7 Bankruptcy and $8000.00 First Time Homebuyer Credit

[oxleg]

Hello,
I purchased a house almost 2 years ago, and received the $8000.00 1st time homebuyer credit. Am in the process of filing bankruptcy.

I have not held onto the house for 3 years, as the homebuyer credit says you have to.

I believe I am supposed to pay back the $8000.00 since I have not lived there for 3 years.

Can I include the $8000.00 1st time homebuyer credit in my bankruptcy, or do I still have to pay that back?

Thanks!

[oxleg]

I forgot to mention... I am including the house in the bankruptcy too.

[HHM]

I don't think there is any clear guidance on this issue.

Since it is a debt, you should list it in your petition. But its status, I think, is somewhat unknown.

[Chowder]

I forgot to mention... I am including the house in the bankruptcy too.

Of course the house gets included. That credit could be an issue if you surrender the house. If you stay and pay maybe not so much.

I had bought a new car a year before the BK, and got to take IIRC an 80% depreciation credit that year for it. Added a nice boost to the return...
I surrendered the car in the BK, no one said anything, so...........

[tcreegan]

Hi oxleg,

I didn't include mine in our BK...but it is just b/c I didn't think about it !!

I would have included it but not expected it to discharge, it would be an IRS debt, not income tax, and not 3 yrs old.

But that wouldn't stop me from trying....eternal optimist I guess..

Tom in Colo

[ValleYum]

The repayment information is on the reverse side of IRS Form 5405 (the form you completed to receive the tax credit):


If you are underwater on your home's equity, Line 13b may get you out of having to repay this if you fulfill the requirements listed. Therefore, it may be a moot point whether or not you have to list it on your bankruptcy petition.

It sounds like it would be worth it to discuss this with a BK or real estate attorney. That would be good news for you. I wish you luck!!

My apologies for the odd spacing on this post.