Understanding your CP03C Notice
You received a tax credit (called the First-Time Homebuyer Credit) for a house you purchased. You may need to file a form to report a change in ownership to the house you purchased.
What you need to do
- Read your notice carefully.
- Review the situations listed in your notice to see if they apply to you.
- Complete a Form 5405, First-Time Homebuyer Credit and Repayment of the Credit, and attach it to a Form 1040, U.S. Individual Income Tax Return or a Form 1040X, Amended U.S. Individual Income Tax Return.
- Repay the tax credit you received if the house you purchased is no longer your main home.
You may want to...
- File your completed forms electronically.
- Download additional information about your situation. Some materials you may be interested in include:
- Read more about the First-Time Homebuyer Credit.
- Call 1-800-829-FORM to have forms and publications mailed to you.
- Use our First Time Homebuyer Credit Account Look-up for specific account and credit reporting information.
- Complete and send us a Form 2848, Power of Attorney and Declaration of Representative to authorize someone (such as an accountant) to contact us on your behalf.
Answers to Common Questions
How much is the repayment amount?
The repayment amount is equal to the full amount of the credit you received minus any credit repayments you may have already made.
Do I have to repay the credit if my home was is destroyed, condemned, or disposed of under threat of condemnation and I acquired a new home within two years?
You do not have to repay the credit if you purchased a new main home within two years of the event.
How and when do I repay the credit?
You must file a Form 5405, First-Time Homebuyer Credit and Repayment of the Credit with your tax return for the year in which the change occurred. You can report your change in ownership status by checking the appropriate box in Part III (Disposition or Change in Use of Main Home for Which the Credit Was Claimed) of the form.
You have to repay the credit by including it as additional tax on the federal income tax return for the year in which the home stopped being your main home. For example, a taxpayer who reports a change of ownership occurring in 2010 must repay the first-time homebuyer credit, minus any payments they might have made to repay the credit, in their 2010 tax return.
I heard that taxpayers didn't have to repay the First Time Homebuyers Credit any longer. Didn't the law change?
The law changed for home purchases in 2009 and 2010, which now have no 15-year repayment requirement. The law did not change the repayment requirement for purchases for home that cease being a main home.
What if my spouse has died, do I have to repay the entire amount of the credit?
If, unfortunately, a spouse is deceased, the remaining spouse only has to repay half of the remaining credit balance: we won't seek repayment for the deceased spouse's half. For example, the surviving spouse will owe only $3,750 for a $7,500 first-time homebuyer credit taken on an earlier joint income tax return.
What if I don't have to pay any additional tax, do I still have to report the change in my ownership status?
Yes, even if you don't have to pay any additional tax, you still need to complete a Form 5405 to report the disposition of your property.
Understanding your notice
Reading your notice
Your notice may look different from the sample because the information contained in your notice is tailored to your situation.
Notice CP03C, Page 1
Tax publications you may find useful
- Form 5405, First-Time Homebuyer Credit and Repayment of the Credit and Instructions
- Publication 530, Tax Information for Homeowners
- Publication 523, Selling Your Home
- Publication 17, Your Federal Income Tax
- Find a copy of any necessary tax forms and instructions
How to get help
Calling the 1-800 number listed on the top right corner of your notice is the fastest way to get your questions answered.
You can also authorize someone (such as an accountant) to contact the IRS on your behalf using this Form 2848, Power of Attorney and Declaration of Representative.
Or you may qualify for help from a Low Income Taxpayer Clinic.
