Form 5405: First-Time Homebuyer Credit And Repayment Of The Credit

DEFINITION of 'Form 5405: First-Time Homebuyer Credit And Repayment Of The Credit'

A tax form distributed by the Internal Revenue Service (IRS) and used by first-time homeowners or long-time residents of a home to claim a tax credit. First-time homebuyers applying for the credit cannot have owned another home within three years of the new home purchase, or if either the purchase price of the home or the homebuyer's adjusted gross income (AGI) exceeds a certain threshold. The amount of the credit is the lesser of either a fixed percentage of the home's purchase price or a fixed dollar value.


If the property the credit is received for is sold within 36 months of the purchase date or if the home no longer is the taxpayer's main home, the homeowner generally will be responsible for repaying at least part of the credit.

BREAKING DOWN 'Form 5405: First-Time Homebuyer Credit And Repayment Of The Credit'

Form 5405 is attached to the homebuyer's tax return, along with a copy of the settlement statement (typically the HUD-1 Form). The form contains all parties' names, signatures, the property's address, the purchase date and the purchase price. Some types of homes, such as mobile homes, can use other forms of contracts to demonstrate that the property meets requirements for the credit.


A first-time homebuyer tax credit may provide the tax payer with a refund even if no taxes are owed.

RELATED TERMS
  1. Adjusted Gross Income - AGI

    A measure of income calculated from your gross income and used ...
  2. Form 8283

    A tax form distributed by the Internal Revenue Service (IRS) ...
  3. IRS Publication 530 - Tax Information ...

    A document published by the Internal Revenue Service (IRS) that ...
  4. IRS Publication 523

    A document published by the Internal Revenue Service (IRS) that ...
  5. HUD-1 Form

    A form used by a settlement or closing agent itemizing all charges ...
  6. Settlement Statement

    A statement that summarizes all the fees and charges that both ...
Related Articles
  1. Home & Auto

    To Rent Or Buy? The Financial Issues

    Thinking of buying a home? We look at the initial and ongoing costs, as well as the so-called benefits.
  2. Credit & Loans

    Mortgage Points: What's The Point?

    Learn how to pay less for your home in the long run, or save in the short run.
  3. Personal Finance

    Understanding Your Mortgage

    We walk through the steps needed to secure the best loan to finance the purchase of your home.
  4. Budgeting

    Mortgages: How Much Can You Afford?

    Answering this means number-crunching as well as factoring in other considerations and expenses.
  5. Taxes

    Avoid Capital Gains Tax On Your Home Sale

    If you have property to sell and want to avoid capital gains tax, a Section 1031 exchange may be the answer.
  6. Credit & Loans

    Understanding The Mortgage Payment Structure

    We explain the calculation and payment process as well as the amortization schedule of home loans.
  7. Home & Auto

    The 3 Biggest Mortgage Lenders (NSM, WFC)

    Learn about the top mortgage lenders of 2016, trends impacting the mortgage lending markets, new product options and consumers' ability to qualify.
  8. Home & Auto

    Mortgage Application: Comparing Brick & Mortar vs. Online

    Learn the differences between applying for a mortgage from a brick-and-mortar lender and an online lender. Find out about documents, fees and processing times.
  9. Home & Auto

    How to Get Rid of Private Mortgage Insurance

    Private mortgage insurance benefits the lender (the sole beneficiary of PMI), but it can add a sizable chunk to your monthly house payment.
  10. Home & Auto

    4 Reasons Why Renting a Home is a Wise Decision

    We've all heard that a home is a great investment, but is it really? In this article, we will look at four reasons why renting could be wiser than homeownership.
RELATED FAQS
  1. What are the Best Ways to Lower My Taxable Income?

    Paying taxes is an unavoidable obligation each year, but individuals and business owners can take advantage of various strategies ... Read Answer >>
  2. Can I borrow from my annuity to put a down payment on a house?

    Learn how you can borrow money from an annuity for a house down payment, but also understand why fees and penalties make ... Read Answer >>
  3. Can I take my 401(k) to buy a house?

    Yes, in some cases you are able to take a limited amount of funds from your 401(k) to purchase a house. Your Roth IRA and/or ... Read Answer >>
  4. Is an adjustable rate mortgage (ARM) safe?

    Learn why an adjustable rate mortgage (ARM) can be a safe option as long as the borrower is familiar with the underlying ... Read Answer >>
  5. When should my tax refund arrive?

    Read about how long it takes the IRS to process your income tax return and what factors could delay receiving your tax refund. Read Answer >>
  6. How Long Should I Keep My Tax Records?

    Having the right information available when the IRS calls can save you considerable time, money and stress. Learn how long ... Read Answer >>
Hot Definitions
  1. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  2. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  3. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  4. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  5. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
  6. Economies Of Scale

    Economies of scale is the cost advantage that arises with increased output of a product. Economies of scale arise because ...
Trading Center