Form 5405

First-Time Homebuyer Credit and Repayment of the Credit

Understanding the 5405 form is essential for certain taxpayers. The complexity of tax laws means that specialized forms like the 5405 can be puzzling. This resource aims to demystify the 5405 form, guiding you through its purposes, requisites, and filing instructions, to ensure you're well-prepared for your tax obligations.

What is a 5405 Form?

The IRS Form 5405, or "First-Time Homebuyer Credit and Repayment of the Credit," primarily facilitated the first-time homebuyer credit, a stimulus measure in past years. Although the program has ended, the form remains relevant for taxpayers dealing with the credit's repayment or meeting the exceptions that allow disengagement from repayment obligations.

  • Purpose and Significance: The form is designed to calculate and report the repayment of the first-time homebuyer credit or affirm qualification for exceptions to repayment.
  • Components of the Form: It features sections for calculating the credit repayment, highlighting adjustments, and specifying reasons for exceptions.

Who Needs a 5405 Form?

The 5405 form targets a select group:

  • Criteria: Those who claimed the first-time homebuyer credit in previous tax years and are currently required to repay the credit.
  • Obligations: Taxpayers must report any repayment amounts annually until the credit is fully reimbursed.
  • Deadlines: The form is filed with your annual tax return, aligning with the tax filing deadline (typically April 15).

How to Read and Understand 5405 Form

Navigating the 5405 form requires a grasp of key sections:

  • Repayment of the Credit: This part calculates the amount owed back to the IRS if you sold the property or it ceased being your primary residence.
  • Common Terms: "Disposition" implies a sale or a change in the property's use; "Adjusted Basis" refers to the property's cost after accounting for tax adjustments.

How to Get Your 5405 Form

Obtaining the form is straightforward:

Common Mistakes and How to Avoid Them

Frequent errors include:

  • Incorrect Repayment Amounts: Ensure calculations are accurate; consult the instructions or a tax professional.
  • Filing Unnecessarily: File Form 5405 only if you're required to report repayment or are claiming an exception.
  • Tips: Double-check figures and use IRS resources or professional help for guidance.

5405 Form and Tax Filing

The 5405 form plays a unique role:

  • Impact on Tax Filing: It affects your tax liability through the repayment process, potentially increasing the amount owed.
  • Role in Tax Returns: Completing it correctly ensures compliance with tax laws regarding the first-time homebuyer credit.

FAQ Section

1. What if I sold my home? Do I still owe the credit?

  • If you sold your home to an unrelated person, you might have to repay the entire credit, depending on the year you claimed it.

2. Can I stop repaying the credit if the home is destroyed?

  • You may qualify for an exception if the home was destroyed; consult the form's instructions for specifics.

3. What if I converted the home to a rental property?

  • Converting the home to a rental property typically triggers the obligation to repay the credit in full for that tax year.

4. Where can I find more information about my specific situation?

  • The IRS instructions for Form 5405 and the IRS website offer guidance tailored to various scenarios.

5. How does divorce affect the repayment of the credit?

  • Divorce can complicate the repayment process, potentially affecting who owes the credit. Legal advice or IRS guidance should be sought.


The 5405 form is a critical document for individuals navigating the repayment of the first-time homebuyer credit or claiming exceptions to repayment. Precision and understanding are key when dealing with this form. If you find yourself overburdened by the complexity, don't hesitate to consult a tax professional. They can provide tailored advice and ensure your tax obligations are met accurately and efficiently.

To further assist you, consider these resources:

Navigating the requirements of the 5405 form can be complex, but with the right resources and guidance, you can confidently fulfill your tax obligations.

Always refer to the IRS website or a tax professional for the most accurate and up-to-date information. provides general information and software tools for tax preparation; however, it does not offer personalized tax, legal, or professional advice. It's recommended to consult with a qualified professional for specific advice related to your financial situation.