Homebuyer Credit is Broken – Again

Today TaxMama® hears from MelissaMarie in the TaxQuips Forum, with a new problem. Let me summarize. She sold her home at a loss last year. She had bought it in 2008 using the Homebuyers Credit – which was required to be repaid – unless she sold the home at a loss. This year, the IRS is holding up her refund because she didn’t include the annual $500 repayment on her tax return – which she did not owe! What can she do?


Dear MelissaMarie,

You have my deepest sympathy.  The whole first time homebuyers credit thing was so messed up when they set it up, I am not surprised that there is such mess at the back end.

Many people and tax pros are running into problems with it.  Since this is affecting so many people, I suspect that the Taxpayers Advocate Service may not be willing to take it on. But ask them. They did a great job on the front end.

You can call them at 1-877-777-4778.  And since it’s been this long – and you have been tracking it (keep notes), they may be willing to step in.

NOTE TO READERS: If you or your clients are having problems with the Homebuyers Credit this year, please let me know. I am working on an article (and talking to the IRS) to find ways to help avoid this problem in the future. (Please post your responses in the TaxQuips Forum – here.)

And remember, you can find answers to all kinds of questions about the first time homebuyers credit and other tax and business issues, free. Where? Where else? At www.TaxMama.com.

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