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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, when all of the following conditions are present at the time of the sale of the home.  

  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 lenders are required to explain the Federal Recapture Tax to borrowers and must submit both the Notice of Potential Recapture Tax form, signed by the borrower, and the Notice - Understanding Tax with their loan application.  

At the loan closing, CHFA lenders are required to provide the borrower with Notice to Mortgagor - Method to Compute form.    

Lenders should also advise borrowers to consult a tax professional when they sell their home.  IRS form 8828 (and instructions) can be obtained at www.irs.gov for additional information.

Homeowners may be eligible to receive reimbursement from CHFA if required to make the federal recapture tax payment.    

(See also, CHFA Operating Manual Section 2 - Program Information)

 

Related Documents Found: 5  matches     Displaying: 1 - 5 
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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.
196Kpdf

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.
44Kpdf

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.
129Kpdf

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.
258Kpdf

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.
422Kpdf
FileSizeType
Found: 5  matches     Displaying: 1 - 5