Lender Tools, Calculators and Look-ups
Recapture Tax
In rare circumstances, a
Federal Recapture Tax may be assessed against a CHFA home
loan borrower at the time she sells her home. Federal
recapture taxes only apply to homes purchased with Tax-Exempt Bonds, like those offered by CHFA, when all of the
following conditions are present at the time of the sale of
the home.
- A borrower sells her home within nine years of purchase.
- A borrower sells the home for more than she paid for the home.
- A borrower's household income is greater than the
federal
recapture tax income limits effective at the time of the
purchase.
Please note: CHFA lenders are required
to explain the Federal Recapture Tax to their
client-borrowers and must submit a
Notice of Recapture Tax form, signed by the borrower,
with their loan application.
At the loan closing, CHFA lenders are required to provide
the borrower with
IRS Form 8828 (and
instructions) and
Notice to Mortgagor.
Lenders should also advise their clients to consult a tax
professional when they sell their home.
(See also,
Section 2 Lender Guide; and
Understanding
Recapture Tax.)
| Related Documents |
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| File | Size | Type | Recap Tax – Income Limits 048-0405
This chart lists the threshold income limits for recapture tax liability based on geographic location of the home and the number of years of ownership | 19K | pdf |
| Recap Tax – Notice to Homebuyer 050-0597
This form is signed by a CHFA loan applicant to certify that the applicant has been informed of his potential liability to pay the Recapture Tax and is submitted with the loan request. | 10K | pdf |
| Recap Tax – Notice to Homebuyer 051-0597
This two-page fact sheet explains the Recapture Tax to a loan applicant. | 4K | pdf |
| Recap Tax – Notice to Mortgagor 052-1195
This legal notice of the maximum Recapture Tax due upon the premature selling of a CHFA-financed home must be provided to borrower and signed by borrower at the loan closing. | 9K | pdf | | File | Size | Type |
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