when the program began in 2008 the allowable tax credit was 10 of the purchase price of the home up to a cap of 7 500 the cap went up to 8 000 in 2009 7 homes with purchase prices that ranged from 75 000 to 80 000 allowed the homebuyer to claim the full tax credit 6 the amount of the credit was the lesser of either a fixed percentage of the home s purchase price or a fixed dollar value 
in most cases if the home was sold within 36 months of the purchase date or if the home ceased to be the taxpayer s primary residence the homeowner was generally responsible for repaying the full credit 2for people who purchased homes in 2008 the credit was more of a 7 500 interest free loan they had to repay it in 15 equal installments over 15 years 7who can file form 5405 first time homebuyer credit and repayment of the credit both individuals and married couples were eligible for the tax credit at first it was open only to first time homebuyers defined by the irs as taxpayers who have not owned another home within the previous three years of the new home purchase later though the credit was extended to longtime residents if they purchased a new main replacement home 2 the credit for this group was a maximum of 6 500 but they generally didn t have to repay it 6neither the purchase price of the home nor the homebuyer s modified adjusted gross income magi could exceed a certain threshold however there was no floor on income so the tax credit could provide the filer with a refund even if they owed no taxes at all 2form 5405 was attached to the homebuyer s tax return along with a copy of the settlement statement which is typically the hud 1 form the form contained all parties names signatures the property s address the purchase date and the purchase price some types of homes such as mobile homes could use other forms of contracts to demonstrate that the property met the requirements for the credit 2qualified homebuyers who purchased a qualified home but did not claim the tax credit on their 2009 returns were encouraged to file an amended 1040 x return with form 5405 attached to claim their credit 2after taking office in jan 2021 president biden announced his intention to help homeowners by making purchases more affordable including a 15 000 first time homebuyer tax credit a bill was introduced to the house in april 2021 where it remained stalled as of september 2022 8example of form 5405information about form 5405 first time homebuyer credit and repayment of the credit along with the form itself can be downloaded on the irs website 95form 5405 revisionin nov 2021 form 5405 was revised to facilitate repayment of the first time homebuyer tax credits the purpose of the newly revised form 5405 is to taxpayers must file the new form 5405 with their 2021 tax return if they purchased the home in 2008 and meet either of the following conditions 