Form 8828 is used to figure and report the recapture tax on the mortgage subsidy if you sold or otherwise disposed of your federally subsidized home.
Form 8828, Recapture of Federal Mortgage Subsidy, is an Internal Revenue Service (IRS) form used to figure and report the recapture tax on the mortgage subsidy of a person that sold or otherwise disposed of their federally subsidized home.
Mortgage subsidy programs are created in order to make homeownership more affordable. This is done by providing qualified prospective homeowners with reduced interest rate loans. A person has a federal mortgage subsidy if they received either of the following benefits:
A person may also have a Federal Mortgage Subsidy if, when they bought their home, either:
A person who has sold or otherwise disposed of their federally subsidized home must use IRS Form 8828 to report the recapture tax they owe.
The 8828 form should be submitted attached to the filer’s Form 1040 for the tax year that their federally subsidized home was sold or disposed of.
Form 8828 IRS is a very simple form to fill out. Make sure to download it in the PDF format to ensure that its format and all information entered remain intact regardless of how it is opened or submitted. It may also be beneficial to have the relevant documents prepared to make sure that all information entered is updated and correct.
If more details on particular steps and items on the form are required, you may consult the instructions for Form 8828 on the IRS website.
Enter your full legal name, as well as the full legal name of any other person filing this form with you.
Social Security Number
Enter your Social Security Number as shown on page 1 of your tax return.
Part I - Description of Home Subject to Federally Subsidized Debt
Line 1 - Property Address
Enter the following information on the address of the concerned property:
Line 2 - Type of Federal Subsidy
Check one of the following boxes that applies to the type of federal subsidy you had on the loan for your home. You may choose between:
If neither box applies, you are not subject to recapture tax on the sale or disposition of your home. Do not fill out this form if neither box applies.
Enter the state, political subdivision (city, county, et cetera), and agency (if any) of the bond or certificate issuer.
Enter the name and address of the original lending institution.
Enter the date that the original loan was closed.
Enter the date that you sold the home or otherwise disposed of your interest in the home.
Enter the number of full years and months between the original closing date as indicated on Line 5 and the date of sale or disposition indicated on Line 6.
Enter the date that the original loan was fully repaid, including a refinancing other than one for which a replacement mortgage credit certificate is issued.
Part II - Computation of Recapture Tax
Enter the sales price of your interest in the home that was sold or disposed of.
Enter the expenses involved in the sale of the property. Include sales commissions, advertising, legal fees, and other similar expenses, in this amount.
Subtract Line 10 from Line 9 and enter the difference.
Enter the adjusted basis of your interest in the home that was sold or disposed of.
Subtract Line 12 from Line 11 and enter the difference. This amount is the gain or loss from the sale or disposition of the home. If the amount is a loss, stop here and attach this form to your Form 1040. You do not owe any recapture tax.
Multiply Line 13 by 50% (0.50) and enter the product.
Enter the modified adjusted gross income.
Enter the adjusted qualifying income.
Subtract Line 16 from Line 15 and enter the difference. If the difference is zero or less, stop here and attach this form to your Form 1040. You do not owe any recapture tax.
If the amount on Line 17 is $5,000 or more, enter “100”. Otherwise, divide the amount on Line 17 by $5,000 and enter the result as a percentage, rounded to the nearest whole percentage.
Enter the federally subsidized amount.
Enter the holding period percentage.
Multiply Line 19 by the percentage on Line 20 and enter the product.
Multiply Line 21 by the percentage on Line 18 and enter the product.
Enter the smaller amount between Line 14 and Line 22. Include this amount on the line for total tax on Form 1040.
While Form IRS 8828 is simple to fill out, it is very important to make sure that all information entered is accurate and complete, so it may be beneficial to double-check the form after it has been accomplished.
Make sure all information entered is correct, and that the form is submitted to the appropriate place on time. This will help avoid any consequences for giving the IRS the wrong information and ensure that your tax information is processed properly.
Practice good contract management. Make sure to keep a copy of the form in a safe and organized area, or even copy it again in order to be doubly sure that you have a backup in case the original is damaged in some way. This will be useful for possible legal purposes in the future, or even simply as a record.
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