The First-Time Homebuyer Credit

Only a few very people will be able to claim a first-time homebuyer credit on their 2011 tax return. In order to claim the credit, you (or your spouse) must have been a member of: (1) the uniformed services, (2) the Foreign Service or (3) an employee of the intelligence community. In addition, you must have been on extended duty outside of the United States for at least 90 days during the period January 1, 2009 through April 30, 2010.

Repayment and recapture of credit. For homes purchased in 2008 when there was a repayment requirement tied to the credit, taxpayers will have to begin making their 15 annual installment payments with their 2010 tax return. If you claim the homebuyer credit on the purchase of a home and you stop using the home as a principal residence within 36 months after the purchase, the tax credit is subject to recapture. Carefully review the rules applicable to recapture if you find yourself in this situation.