My client had been renting their home, living there for around 10 years, and in july of this year purchased it as a fist time home buyer, and continued living there, but plans to move out in a year or so. Will he qualify to keep the credit, or will he have to pay it back?
If the primary residence is sold or is no longer used as primary residence within 36 months of the purchase date, the credit has to be paid back.
I agree with sweetpea40 (and am giving a point for that answer) but would like to add that the payback is in full. There is no proration if you live in the home for a period of time, but less than the 36 months.
And if he sells it for less than an $8,000 gain, his payback is the lesser of the gain or the $8,000. A loss would have zero payback.
If the residence is lived in less than 36 months then he will have to pay it back
Actually, it is not only selling it, but if it no longer qualifies as his residence any more. So the entire credit would be repayable. Selling it could cause less payback, but moving out will not cause less payback.
