Form 5405 – Repayment of the First‑Time Homebuyer Credit

Q: How do employee business expenses get treated?

Model on <a href="/calculator/2106.html" title="Form 2106">Form 2106</a> (or <a href="/calculator/2106-EZ.html">2106-EZ</a>) where applicable.

Last reviewed: 2025‑10‑26

Use the IRS Form 5405: Repayment of the First‑Time Homebuyer Credit Tax Form Calculator IRS Form 5405: Repayment of the First‑Time Homebuyer Credit as a stand alone tax form calculator to quickly calculate specific amounts for your 2026 5405 state tax return. Alternatively, you can use one of our Combined Federal and State Tax Estimators to quickly calculate your salary, tax, and take-home pay.

Form 5405 is used to report and calculate repayment of the first‑time homebuyer credit originally claimed for a home purchased in 2008. Taxpayers must file this form if they sell that home or it stops being their main home in 2024. This ensures proper reconciliation of the remaining credit balance with the IRS.

Who Must File Form 5405

You must file Form 5405 with your 2024 tax return if you:

Sold your 2008 home during 2024.
Converted it to rental, business, or vacation use.
Otherwise stopped using it as your primary residence.

If you still live in the same home and continue to repay the credit annually, you generally report the installment directly on Schedule 2 (Form 1040), line 10 — no Form 5405 is required.

Form 5405 – Repayment of the First‑Time Homebuyer Credit
Part I. Disposition or Change in Use of Main Home for Which the Credit Was Claimed
1	Enter the date you disposed of, or ceased using as your main home, the home for which you claimed the credit (MM/DD/YYYY) (see instructions)
2	If you meet the following conditions, check here - - - ▸ I (or my spouse if married) am, or was, a member of the uniformed services or Foreign Service, or an employee of the intelligence community. I sold the home, or it ceased to be my main home, in connection with Government orders for qualified official extended duty service. No repayment of the credit is required (see instructions). Stop here.
3	Check the box below that applies to you. See the instructions for the definition of “related person.”
a	I sold (including through foreclosure) the home to a person who isn't related to me and had a gain on the sale (as figured in Part III below). Go to Part II below.
b	I sold (including through foreclosure) the home to a person who isn't related to me and didn't have a gain on the sale (as figured in Part III below). No repayment of the credit is required. Stop here.
c	I sold the home to a related person OR I gave the home to someone other than my spouse (or ex-spouse as part of my divorce settlement). Go to Part II below.
d	I converted the entire home to a rental or business use OR I still own the home but no longer use it as my main home. Go to Part II below.
e	I transferred the home to my spouse (or ex-spouse as part of my divorce settlement). The full name of my ex-spouse is ▸
The responsibility for repayment of the credit is transferred to your spouse or ex-spouse. Stop here.
f	My home was destroyed, condemned, or sold under threat of condemnation and I had a gain (see instructions).
g	My home was destroyed, condemned, or sold under threat of condemnation and I didn't have a gain (see instructions).
h	The taxpayer who claimed the credit died in 2016. No repayment of the credit is required of the deceased taxpayer. If you are filing a joint return for 2016 with the deceased taxpayer, see instructions. Otherwise, stop here.
Part II. Repayment of the Credit
4	Enter the amount of the credit you claimed on Form 5405 for a prior year. See instructions if you filed a joint return for the year you claimed the credit or you checked the box on line 3f or 3g	4
5	If you purchased the home in 2008, enter the amount of the credit you repaid with your tax returns for the years 2010 through 2015. Otherwise, enter -0-	5
6	Subtract line 5 from line 4. If you checked the box on line 3f or 3g, see instructions. If you checked the box on line 3a, go to line 7. Otherwise, skip line 7 and go to line 8	6
7	Enter the gain on the disposition of your main home (from line 15 below)	7
8	Amount of the credit to be repaid. See instructions Next: Enter the amount from line 8 on your 2016 Form 1040, line 60b, or Form 1040NR, line 59b.	8
Part III. Form 5405 Gain or (Loss) Worksheet
Note: Complete this part only if your home was destroyed or you sold your home to someone who isn't related to you (including a sale through condemnation or under threat of condemnation). See Pub. 523, Selling Your Home, for information on what to enter on lines 9, 10, and 12. But if you sold your home through condemnation, see chapter 1 in Pub. 544, Sales and Other Dispositions of Assets, for information on what to enter on lines 9 and 10.
9	Selling price of home, insurance proceeds, or gross condemnation award	9
10	Selling expenses (including commissions, advertising and legal fees, and seller-paid loan charges) or expenses in getting the condemnation award	10
11	Subtract line 10 from line 9. This is the amount realized on the sale of the home	11
12	Adjusted basis of home sold (see instructions)	12
13	Enter the first-time homebuyer credit claimed on Form 5405 minus the amount of the credit you repaid with your tax returns for the years 2010 through 2015	13
14	Subtract line 13 from line 12. This is the adjusted basis for purposes of repaying the credit	14
15	Subtract line 14 from line 11 • If line 15 is more than -0-, you have a gain. Check the box on line 3a and complete Part II. However, check the box on line 3f (instead of the box on line 3a) if your home was destroyed or you sold the home through condemnation or under threat of condemnation. Then complete Part II if you purchased the home in 2008 or you purchased the home in 2011 and the event occurred in 2014. • If line 15 is -0- or less, check the box on line 3b. However, if your home was destroyed or you sold the home through condemnation or under threat of condemnation, check the box on line 3g instead. You don't have to repay the credit.	15

How the Form Works

Part I – Disposition or Change in Use: Describes what happened to the home and determines whether an exception applies (for example, service members who move for official duty do not repay).
Part II – Repayment Calculation: Shows the total credit claimed, subtracts prior repayments, and computes the remaining balance.
Part III – Gain on Sale: If you sold the home at a gain, you may need to repay up to the gain amount only.

Last reviewed: 2025‑10‑26: If you believe this form requires an update, please contact us.

Key Tips for Filing

Attach Form 5405 to your Form 1040, 1040‑SR, or 1040‑NR for the year of sale or change in use.
Maintain copies of prior Form 5405 filings and closing documents.
Members of the Armed Forces, Foreign Service, and intelligence community may qualify for repayment exceptions — see the form instructions.
Electronic filing is supported through major tax software providers and directly via IRS Free File.

Use Form 5405 carefully to avoid repayment errors and maintain compliance with the original First‑Time Homebuyer Credit requirements. You can review the current form at https://www.irs.gov/pub/irs-pdf/f5405.pdf.

Frequently Asked Questions

How do employee business expenses get treated?

Model on Form 2106 (or 2106-EZ) where applicable.

Does the calculator include employer payroll taxes?

No—these results show employee withholding only; employer FICA and FUTA are separate.

Are employer payroll taxes deducted from employee pay?

No. These are separate costs paid entirely by the employer.

What if I get a mid-year raise?

Update your inputs to reflect new annualized income; withholding adjusts proportionally.

Why does the monthly view differ from my payslips?

We default to 1/12. Day-based payroll (28–31 days) creates small month-to-month differences.

Important Notes

All calculations are estimates for guidance only. Always review your return and consider professional advice when submitting official filings.

Form 5405 – Repayment of the First‑Time Homebuyer Credit

Who Must File Form 5405

How the Form Works

Key Tips for Filing