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Page 1 of 3 Instructions for Form 8828 (Rev. 12-2009) 11:36 - 5-MAR-2010
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Department of the Treasury
Internal Revenue Service
Instructions for Form 8828
(Rev. March 2010)
Recapture of Federal Mortgage Subsidy
• You received a federal mortgage ownership interest and Dara would figure
General Instructions subsidy (see Federal Mortgage Subsidy her recapture tax separately based on her
Section references are to the Internal earlier). 25% ownership interest.
Revenue Code unless otherwise noted. Qualified rehabilitation loan. A
When and Where To File qualified rehabilitation loan (QRL) is a
Purpose of Form Attach your Form 8828 to the Form 1040, loan funded by a QMB for the
Use this form to figure and report the U.S. Individual Income Tax Return, for the rehabilitation of a home provided that:
recapture tax on the mortgage subsidy if tax year in which you sold or otherwise • There were at least 20 years between
you sold or otherwise disposed of your disposed of your home. File it when the the date of the building’s first use and the
federally subsidized home. Form 1040 is due (including extensions). date rehabilitation began,
If you have to file Form 8828, you must • A certain percentage of the walls and
Federal Mortgage Subsidy use Form 1040. framework was retained in place,
Youyou receivedhave a federaleithermortgageof the followingsubsidy if Special Rules percent• The rehabilitationor more of yourcostsadjustedamountedbasistoin25
benefits.•A mortgage loan (including a qualified awayGivingyourawayhomeyour(otherhome.thanIftoyouyourgave the•Youbuildingwereafterthe firsttheoccupantrehabilitation,of theand
rehabilitation loan) that had a lower spouse or ex-spouse incident to divorce), home after the rehabilitation was
interest rate than was usually charged you must figure your recapture tax as if completed.
because it was funded from a tax-exempt you had actually sold your home for its If you sold or disposed of this
qualified mortgage bond (QMB) issue. fair market value at the time of the rehabilitated building that was your home
• A mortgage credit certificate (MCC) disposition. within 9 years after you received the QRL,
with your mortgage loan that you could Divorce. The transfer of an interest in you must recapture the federal mortgage
use to reduce your federal income taxes. the home by one spouse (or former subsidy. See section 143(k)(5) for details.
You may also have a federal mortgage spouse) to another does not result in Special rules may apply for certain
subsidy if, when you bought your home, recapture tax to either person (do not file residences destroyed in a federally
143(k)(12[sic(13)]) for more details.
either: • thisItform)is incidentif: to divorce, and declared disaster. See section
onwerea1.QMB-fundedqualifiedYou assumedto obtainloan,theaseller’sprovidedloan fromobligationthattheyoudeducted•No gainfromor lossincomewas includedon your return.in or noHomerecaptureimprovementof the federalloan.mortgageThere is
proceeds of a QMB, or See Pub. 504, Divorced or Separated subsidy if instead of a QRL you received
2. The seller’s MCC was transferred Individuals, for situations where gain or a qualified home improvement loan
to you with the approval of the issuer and loss is included in or deducted from (QHIL) funded by a QMB. A QHIL is
both the following apply: income on the transfer incident to divorce. limited to $15,000 and must be used for
aneededreplacementb.a. TheYoutoissuermetget antheMCC.ofMCC,eligibilitythe MCCandrequirementsissued youDestructioniscasualty,taxdestroyedif youtherereplacebybygenerallyfire,casualty.thestorm,homeisflood,no(forIf yourrecaptureuseorhomeotherasalterations,thatorsectionenergyprotect143(k)(4)efficiencyrepairs,or improveforandofdetails.yourtheimprovementsbasichome.livabilitySee
your main home) on its original site. In Qualifying subordinate mortgage loan
general, the period for replacement is (or grant). A qualifying subordinate
Recapture Tax limited to 2 years after the end of the tax mortgage loan (or grant) (QSML) is a loan
If you sold or otherwise disposed of your year when the destruction happened. If that can be made in addition to any QMB
home during the first 9 years after you you do not replace the home in time, you or MCC federally subsidized financing. To
received a federally subsidized QMB or must file Form 8828 with Form 1040X, receive a QSML, you must agree that if
MCC loan, you may have to pay back Amended U.S. Individual Income Tax you sell your home within a 9-year period,
(recapture) all or part of the federal Return, for the year the home was you either sell according to certain terms
mortgage subsidy you received by destroyed. or share any gain with the QSML
increasing your federal income tax for the In certain circumstances, the governmental lender. See section
year in which you sold or disposed of your replacement period may be extended if 143(k)(10). If you had a QSML, see the
home. Refinancing of a federally the home is located in a federally line 13 instructions on page 2.
subsidized loan without a sale or declared disaster area and is destroyed Refinancing your home. Proceeds from
disposition of the home does not result in by reason of that disaster. For more a QMB cannot be used to refinance a
recapture, but a later sale or disposition information, see Pub. 547, Casualties, home mortgage. However, replacement
after the refinancing may result in Disasters, and Thefts. of construction period, bridge, or similar
recapture. Two or more owners. In general, if two temporary financing used when you first
or more persons own a home and are purchased your home is not treated as
Who Must File jointly liable for the federally subsidized refinancing.
You must file this form if all of the mortgage loan, figure the actual recapture If, once you have received permanent
following apply. (For exceptions, see tax separately for each, based on the financing from the proceeds of a QMB,
Special Rules on this page.) interest of each in the home. the home is refinanced (with conventional
• You sold or otherwise disposed of your For example, Dwaine has a 75% financing), the federal subsidy on your
home (whether or not you realized a ownership interest in a house and his original QMB loan is subject to recapture
gain). daughter Dara has the remaining 25% when you sell or dispose of your home
• Your original mortgage loan was ownership interest. Dwaine would figure within the 9-year recapture period. If you
provided after December 31, 1990. his recapture tax based on his 75% refinance within the first 4 years after the
Cat. No. 14075L