Today TaxMama hears from Jewelz in the Tax Quips Forum, in distress. “I purchased my primary residence in October of 2009. My roommate moved out in April 2011. That led me to turn home into a rental due to not being able to make mortgage payments. I am barely breaking even, so there is no rental profit. Does this mean I owe the full $8,000 when I file for 2011?”
I am so sorry to hear about your problems. But the homebuyers credit was designed to give people a HOME, not an investment property.
You’ve turned it in into a rental before the 36-month period ended. You could have continued to live in it and advertised for another roommate. That way, you would not have had to repay the credit – and you could have covered the mortgage payments.
Alas, you did not.
You must repay it when you prepare your 2011 tax return. You will have the option of getting an installment agreement from the IRS to pay it back over a few years. But you’re better off not being in debt to the IRS. See if you can find another way.
You have until 10/15/2012 (with an extension) to find a way to pay it.
And remember, you can find answers to all kinds of questions about homebuyers credits and other tax issues, free. Where? Where else? At www.TaxMama.com.[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]
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