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Recapture Tax

In rare circumstances, a Federal Recapture Tax may be assessed against a CHFA home loan borrower at the time the borrower sells the home.  Federal recapture taxes only apply to homes purchased with Tax-Exempt Bonds, like those offered by CHFA.  All of the following conditions must exist at the time of the sale of the home to trigger repayment of the recapture tax.  

  1. A borrower sells the home within nine years of purchase.
  2. A borrower sells the home for more than the borrower paid for it.
  3. A borrower's household income is greater than the federal recapture tax income limits effective at the time of the purchase.    

Please note:  CHFA borrowers will receive disclosure information at the time of application and a "Federal Recapture Tax-Method to Compute" form at the loan closing.  This form indicates the federal income limits effective during the nine years of ownership when the federal recapture tax may come due if the above conditions are present.  Please save this document. Consult a tax professional if you have any questions or obtain IRS Form 8828 (and Instructions) for additional information at You may be eligible to receive reimbursement from CHFA if you are required to make the Federal Recapture Tax payment.

Related Documents Found: 5  matches     Displaying: 1 - 5 
120 Recapture Tax (The Federal) Notice to Mortgagor- Method to Compute 052-1195-S Rev 6-17
This form is for "Sample Purposes Only". Notice is generated by LOS with commitment letter and signed by the borrower/s providing them legal notice of a potential tax due upon the sale of the home during the Recapture Tax period.

122 Recapture Tax (The Federal) Notice to Mortgagor - Potential Tax 051-0597 Rev 6-16
This is a CHFA disclosure document that advises the borrower of the reason for the Recapture Tax provision and the conditions under which it will be applicable.

124 Recapture Tax (The Federal) Notice to Mortgagor- Understanding Tax 050-0597 Rev 6-16
This is a CHFA disclosure that the Lender is required to present to a potential borrower at the time of application to certify the applicant has been informed of the potential Recapture Tax liability associated with CHFA mortgage financing.

125 Recapture Tax (The Federal) - Reimbursement Request 049-0313 Rev 4-17
This form is used to request reimbursement from CHFA of the Federal Recapture Tax borrowers paid following the sale or other disposition of a residence purchased and financed through tax-exempt bonds issued by CHFA for closings on or after 3/18/13.

126 Recapture Tax (The Federal) Threshold Income Limits Chart 048-0405 Rev 6-17
This chart lists the threshold income limits for Recapture Tax liability based on the geographic location of the home and the number of years of ownership.
Found: 5  matches     Displaying: 1 - 5