What This Notice Means

You received the First-Time Homebuyer Credit. That credit came with conditions, including that the home stays your main home. CP03C says IRS records show a change (a "disposition") in the status of that property, so you may no longer meet the conditions.

A home is no longer considered eligible when, for example:

  • It becomes a second home and isn't your main residence.
  • It's converted completely to rental or business use.
  • It's foreclosed, repossessed, or abandoned.
  • It's sold.
  • It's destroyed or condemned.

These rules applied for 3 years if you bought the home on or after January 1, 2009, and for 15 years if you bought it in 2008. The 15-year repayment period for 2008 purchases ended with the 2024 tax return.

What to Do

If there was a change: Complete Form 5405, Repayment of the First-Time Homebuyer Credit, and attach it to your tax return for the year the change happened. If you already filed that year's return, file an amended return (Form 1040-X) with Form 5405.

If nothing changed: Call the number on your notice so the IRS can update its records. You may be asked for documentation, such as a copy of your driver's license as proof of residence.

How Repayment Works

  • You generally repay the credit you haven't already repaid, as additional tax for the year the home stopped being your main home.
  • If you sold the home to someone not related to you, repayment is limited to your gain on the sale, figured on Form 5405. No gain, no repayment.
  • If the home was destroyed, condemned, or disposed of under threat of condemnation, you don't have to repay if you bought a new main home within two years.
  • If the credit was claimed on a joint return and your spouse died, you keep repaying only your half of the credit.
  • Even if you owe no additional tax, you still must file Form 5405 to report the change.

If You Don't Respond

If you don't respond, or the IRS decides there was a change, you may have to repay the credit. The IRS will send a notice with the repayment amount.

If you received a CP03C and need help with the credit repayment, call us at (813) 229-7100.