News: Program - Single Family
Single Family Mortgage Recapture Tax Risk Eliminated
The Nebraska Investment Finance Authority (NIFA) has taken the confusion and worry out of the recapture tax provision associated with the Single Family Mortgage Program. For all loans closed on or after June 1, 2004, and financed through the Single Family Bond Program, NIFA will reimburse any homebuyer who sells his or her home and is required to pay the federal recapture tax.
Homebuyers who finance their mortgage loans through federally subsidized home loan programs, such as NIFA’s Single Family Bond Program, are subject to payment of a recapture tax to the Internal Revenue Service (the “IRS”) representing all or a part of the benefit they received from the home loan program depending on when they sell or otherwise dispose of their home.
The recaptured benefit takes the form of a federal tax, and the tax becomes due if:
(1) the homebuyer sells the home within the first nine years of the closing date of the mortgage loan,
(2) the homebuyer realizes a gain on the sale of the home as defined by the IRS, and
(3) the homebuyer’s income has increased since the closing date and exceeds the limits established by the IRS.
A homebuyer seeking a Recapture Tax Reimbursement will need to apply to NIFA by July 15 of the calendar year immediately following the calendar year in which the home was sold. NIFA will reimburse a homebuyer for payment of any recapture tax only if the NIFA-financed mortgage loan was outstanding at the time of sale (i.e. NIFA will not reimburse the homebuyer if the NIFA mortgage loan has been refinanced).
The reimbursement from NIFA will be limited to the actual amount of the recapture tax. (NIFA will not reimburse for any fees, interest, expenses or penalties incurred.) NIFA will not calculate the amount of the recapture tax owed by the homebuyer upon sale or disposition of the home. If assistance is needed, the homebuyer will need to consult a personal tax advisor or the IRS.
For more information see NEW Recapture Tax Reimbursement or contact Jacki Young, NIFA Single Family Program Manager at 402-434-3915.
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