Specific Instructions

Note.   If your home was financed with a federally subsidized loan, you should have received notification in writing from the bond issuer or the lender at the time your mortgage was provided. The notification should state that your home was financed with a mortgage loan from the proceeds of a tax-exempt bond or that you received a mortgage credit certificate with your mortgage loan. The notification should include information needed to figure your recapture tax and it should advise you to keep it for your records.

Name(s) and social security number.   The name(s) and social security number on Form 8828 should be the same as those shown on your Form 1040.

Part I—Description of Home Subject to Federally Subsidized Debt

Line 1.   List the address of the property that was subject to the federally subsidized debt, not your current address as shown on your Form 1040.

Line 2.   Check the applicable box on line 2 from the information on the notification given to you at the time you took out the loan.

Line 3.   Fill in the requested information from the notification discussed above. If you have a problem identifying the issuer, contact your lender and ask for the information.

Line 4.   Fill in the name and address of the bank or other lender that provided your original mortgage.

Line 5.   Fill in the month, day, and year that your original federally subsidized mortgage loan was provided. This generally is the date of settlement on your home. However, if the loan became federally subsidized debt at a later date, use that date instead.

Line 6.   Fill in the applicable month, day, and year. The settlement or closing date generally is the date of sale. However, Form 8828 also applies to certain other dispositions of your home. For instance, the date to enter on line 6 may be the date you deeded the property to a relative (see Giving away your home under Special Rules on page 1).

Line 8.   Enter the date the original federally subsidized loan was fully repaid. (This may be the same as the date of sale or other disposition on line 6.) A refinanced QMB loan is fully repaid on the date of its refinancing (with conventional financing). However, a refinanced MCC loan that met all the conditions specified earlier under Refinancing your home is considered an extension of the original MCC loan. Do not enter the refinancing date for such an MCC on line 8. See Refinancing your home and the instructions for line 20.

Part II—Computation of Recapture Tax

Note.

You must report all required information for your interest in the home. This may be less than 100% if someone else also has an interest in the home (see Special Rules on page 1).

Line 9.   This item applies to both sales and other dispositions (see Giving away your home under Special Rules on page 1). If your home was disposed of other than by sale, the sales price is the fair market value of the home at the time of the disposition. You should report only the part of the sales price representing your interest in the home (see Two or more owners and Qualifying subordinate mortgage loan (or grant) under Special Rules on page 1).

Line 10.   Include sales commissions, advertising, legal fees, etc., allocable to your interest in the home.

Line 12.   In general, the adjusted basis of your interest in the home is your share of the cost of the property plus purchase commissions and improvements, minus depreciation. Do not reduce the adjusted basis for any gain that you did not recognize on the sale of a previous home.

  If you received your home, or interest in a home, incident to a divorce, your adjusted basis is generally the same as that of your spouse (or former spouse).

  For details on how to determine your adjusted basis, get Pub. 551, Basis of Assets.

Line 13.   Enter “QSML” on the dotted line to the left of the line 13 entry space if you sold your home at a gain within the 9-year recapture period and paid a share of that gain to the QSML governmental lender. In the amount column for line 13, enter your share of the gain. Attach a worksheet to your Form 8828 to explain how you calculated your share of the gain. Show the date you paid the QSML governmental lender its share of the gain and the amount of that share. See Qualifying subordinate mortgage loan (or grant) on page 1.

Line 15.   Figure your modified adjusted gross income as follows:
  • Begin with: Your adjusted gross income as shown on your Form 1040.

  • Add: Any tax-exempt interest that you received or accrued for the tax year.

  • Subtract: Any gain included in your gross income because of the disposition of your home.

Line 16.   If your home was financed with a federally subsidized loan, you should have received notification in writing from the bond issuer or the lender at the time your mortgage was provided. The notification contains a table which lists adjusted qualifying income figures. Your adjusted qualifying income is found in the column of the table that corresponds to your family size (number of family members living with you at the time of the sale) on the line that corresponds to the number of full and partial years that you held your home.

Line 19.   The federally subsidized amount should be found on the notification you received from the bond issuer or from your lender. It is equal to 6.25% of the highest amount of the loan that was federally subsidized. Enter the figure on line 19.

Line 20.   You will find your holding period percentage on the same line of the table from which you obtained your adjusted qualifying income (see line 16 instructions). However, if you fully repaid the federally subsidized loan within 4 years of the closing date of the loan, and before selling or otherwise disposing of your home, you will need to use the worksheet on page 3 to redetermine your holding period percentage for line 20.


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