Is it possible to make larger payments than the $500 each year? I know we will not be in this home for the next 15 years. I would like to have as little as possible deducted from our sale earning once we decide to sell. I have asked this question to local H&R Blocks, Turbo Tax and the toll free number to the IRS and have not been able to find the answer.
As of right now, your only option is paying it off over 15-year period at a set amount each year unless you sold your home within that period. If you sold your home within the 15-year period, then you’ll have to pay the balance at once in the tax year when you sold the home.
The IRS will probably come up with one or two more options when the repayment period starts in 2010 tax year.
Since this is so new I doubt that this scenario has been considered. There will have to be a line on the income tax return for 2010 to account for these payments. I could not imagine that the IRS would not accept larger amounts at that time. With the changes in the credit happening right now with the new bill, they will be putting forth more info in the future as to the repayments.
I know this is not helpful, but just be patient and hopefully we will have the answers soon.
Laura H – H&R Block – Senior Tax Advisor 5
**This advice was prepared based on our understanding of the tax law in effect at the time it was written as it applies to the facts that you provided.
This issue has not been addressed by the IRS as of yet.
According to the IRS person I spoke with, as the payments do not start until 2010, they really haven’t thought about it yet.
I would expect there to be a line in the “tax” portion of the 1040 starting in 2010 where you can input an amount to pay back.
Why would you do that? If you feel the need to do it, just set up a separate savings account and put the extra there. Also, remember that if you sell and make no profit, you don’t repay. The repayment comes out of the profit on the home.
Nope, it’s 1/15th per year. Anything extra would be refunded to you.