FTHBC taken 2010, 2012 got job promotion & moved out of state...now what?

[nwtaxlady]

Taxpayer purchased home 4/22/10 and took the $8000 FTHBC on the 2010 return.

2012 Taxpayer got a promotion to VP with his company and had to move out of State to where the Company's Headquarter is. July 1st, 2012 was the date of move. Taxpayer had to put the house up for sale for less than Purchase price due to the economy. The house didn't sell and close until Jan 2013 at a loss.

So how is this situation treated?

[appelman]

Complete Form 5405.

In particular, use Part III to calculate the gain or loss using a specially adjusted basis obtained by subtracting the credit from the ordinary adjusted basis.

[mactoolsix]

Interesting that the form has no provision for a home that ceased to be the principle residence in 2012 and did not sell until 2013. Since they moved in 2012, the 5405 should have been filed for 2012 taxes, however the home had not actually sold yet.

While the intent of the law is to not require credit repayment because the home sold at a loss, when the sale spans two tax years (or possibly more), how do you report this? Maybe a note with the 2012 return "Home currently for sale" then file a form 5405 with the 2013 return, or amend the 2012 return when the home finally sells?

Mike

[nwtaxlady]

home for sale (below purch price) in 2012 but did not close until 1/4/13.

I am doing the 2012 return now. House sold at a loss 1/4/13. So what is the correct way to address this situation on the 2012 return?

Do nothing on the 2012 return... as in NO form 5405. Then Fill out the form 5405 with the 2013 return? Which calculates the loss in part III (Gain or Loss Worksheet).

Or complete the 5405 with the info I have showing the loss etc. but use 12/31/12 date?

Or... ???? Is there a better way or a right way to handle this situation?

I have read on IRS' website all the scenarios and Q & A etc and NO WHERE do I find this scenario.

Please help! I need to finish up this return. I need more replies!!

Thanks!!

[Snaggletooth]

IRS Silence is Intentional

NWTaxLady - sometimes when the IRS publishes nothing, it's because they don't want to go on record to lock them into a position which may affect thousands of cases.

They are notorious for wanting to assess each case on its own WITHOUT any guidelines that fix their position. Allows them to make up the rules as they go along. Also allows each auditor or reviewer the latitude to take different positions, depending on who is doing the review. The effect of not having clear positions from the Code and Regs is that many of these things end up in Tax Court. And even then, the IRS sometimes will not take Court decisions as a precedent.