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

AAA

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.

INVESTOPEDIA EXPLAINS '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. Form 8283

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

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

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

    A form used by a settlement or closing agent itemizing all charges ...
  5. Adjusted Gross Income - AGI

    A measure of income used to determine how much of your income ...
  6. Settlement Statement

    A statement that summarizes all the fees and charges that both ...
RELATED FAQS
  1. How is market value determined in the real estate market?

    Anyone who has ever tried to purchase or sell a home has probably heard a lot about the property's fair market value, or ... Read Full Answer >>
  2. What are the best free online calculators for calculating my taxable income?

    Free online calculators for determining your taxable income are located at Bankrate.com, TaxACT.com and Moneychimp.com. Determining ... Read Full Answer >>
  3. How do alimony and child support factor into my taxable income?

    The Internal Revenue Service, or IRS, applies a different tax treatment to alimony than child support. Most forms of alimony ... Read Full Answer >>
  4. How do I avoid a tax lien on my property?

    The best way to avoid a tax lien on your property is to make sure you pay all your state, municipal and federal taxes in ... Read Full Answer >>
  5. What is the difference between AGI (adjusted gross income) and gross income?

    In the United States, individuals pay taxes based on their adjusted gross income, or AGI, rather than their gross income. ... Read Full Answer >>
  6. What does the IRS say about what constitutes taxable income?

    Any amount of income, which is defined as earned money coming in, not just wages, is considered taxable by the Internal Revenue ... Read Full Answer >>
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. Taxes

    Are You Paying Too Much in Taxes?

    Overpaying taxes amounts to an interest-free loan to the government. Here are some ways to avoid that scenario.
  8. Professionals

    What Does an Auditor Do?

    An auditor ensures that organizations maintain accurate and honest financial records.
  9. Home & Auto

    When Is the Best Time for You to Buy a House?

    Making what is likely to be the single most expensive purchase of your lifetime shouldn’t be done on a whim.
  10. Investing

    Where Are Real Estate Stocks Heading?

    We summarize five economic reports that investors should monitor monthly to keep them informed of where real estate and its related stocks are heading.

You May Also Like

Hot Definitions
  1. Nuncupative Will

    A verbal will that must have two witnesses and can only deal with the distribution of personal property. A nuncupative will ...
  2. OsMA

    An abbreviation for Oscillator - Moving Average. OsMA is used in technical analysis to represent the variance between an ...
  3. Investopedia

    One of the best-known sources of financial information on the internet. Investopedia is a resource for investors, consumers ...
  4. Unfair Claims Practice

    The improper avoidance of a claim by an insurer or an attempt to reduce the size of the claim. By engaging in unfair claims ...
  5. Killer Bees

    An individual or firm that helps a company fend off a takeover attempt. A killer bee uses defensive strategies to keep an ...
  6. Sin Tax

    A state-sponsored tax that is added to products or services that are seen as vices, such as alcohol, tobacco and gambling. ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!