If you took advantage of the home buyer credit on your tax return in 2008, you should have started to pay back the credit in 2010. The 2008 credit is the ONLY home credit currently that must be paid back. It is recaptured, or paid back, over 15 years on Form 5405. In essence, it was a no interest loan from Uncle Sam of $7500. If you sell the home prior to the end of the 15 year payback period, you will have to repay the remaining balance in the year of sale. Something to consider when you are trying to determine how much money you will actually net out of your home to be able to put down on another one.
The IRS does NOT mail out reminder letters about recapturing this credit. You are expected to do it on your own. And, of course, the IRS will penalize you if you forget. It’ll just take them a year or two to get around to notifing you about it. If you can’t find your 2008 return and need to check to see if you need to include this repayment on your tax return, use the link I’m including on my Favorite Tax Websites listing titled IRS First Time Homebuyer Credit.