Fillable Form 8828

What is Form 8828?

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 mortgage loan (including a qualified rehabilitation loan) that had a lower interest rate than was usually charged because it was funded from a tax-exempt qualified mortgage bond (QMB) issue.
• A mortgage credit certificate (MCC) with your mortgage loan that they could use to reduce their federal income taxes.

A person may also have a Federal Mortgage Subsidy if, when they bought their home, either:

• They assumed the seller's obligation on a Qualified Medicare Beneficiary (QMB)-funded loan, provided that they were qualified to obtain a loan from the proceeds of a QMB
• The seller's Mortgage Credit Certificate (MCC) was transferred to them with the approval of the issuer and both the following apply:
  • They met the eligibility requirements needed to get an MCC
  • The issuer of the MCC issued them a replacement MCC.

Who needs to use Form 8828?

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.

How to fill out Form 8828?

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.

Name(s)

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:

• Number
• Street
• City or Town
• State
• ZIP Code

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:

• Mortgage Loan from the Proceeds of a Tax-exempt Bond
• Mortgage Credit Certificate

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.

Line 3

Enter the state, political subdivision (city, county, et cetera), and agency (if any) of the bond or certificate issuer.

Line 4

Enter the name and address of the original lending institution.

Line 5

Enter the date that the original loan was closed.

Line 6

Enter the date that you sold the home or otherwise disposed of your interest in the home.

Line 7

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.

Line 8

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

Line 9

Enter the sales price of your interest in the home that was sold or disposed of.

Line 10

Enter the expenses involved in the sale of the property. Include sales commissions, advertising, legal fees, and other similar expenses, in this amount.

Line 11

Subtract Line 10 from Line 9 and enter the difference.

Line 12

Enter the adjusted basis of your interest in the home that was sold or disposed of.

Line 13

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.

Line 14

Multiply Line 13 by 50% (0.50) and enter the product.

Line 15

Enter the modified adjusted gross income.

Line 16

Enter the adjusted qualifying income.

Line 17

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.

Line 18

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.

Line 19

Enter the federally subsidized amount.

Line 20

Enter the holding period percentage.

Line 21

Multiply Line 19 by the percentage on Line 20 and enter the product.

Line 22

Multiply Line 21 by the percentage on Line 18 and enter the product.

Line 23

Enter the smaller amount between Line 14 and Line 22. Include this amount on the line for total tax on Form 1040.

Tips when filling out Form 8828

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.