U.S. Individual Income Tax Return Forms

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Instructions for Form 8828

Department of the Treasury
Internal Revenue Service

(Rev. November 2024)

Recapture of Federal Mortgage Subsidy

General Instructions

• You sold or otherwise disposed of your
home (whether or not you realized a gain).
• Your original mortgage loan was
provided after December 31, 1990.
• You received a federal mortgage
subsidy (see Federal Mortgage Subsidy
earlier).

For example, Dwaine has a 75%
ownership interest in a house and his
daughter, Dara, has the remaining 25%
ownership interest. Dwaine would figure
his recapture tax based on his 75%
ownership interest and Dara would figure
her recapture tax separately based on her
25% ownership interest.

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October 1, 2024

Section references are to the Internal
Revenue Code unless otherwise noted.

Purpose of Form

Use this form to figure and report the
recapture tax on the mortgage subsidy if
you sold or otherwise disposed of your
federally subsidized home.

Federal Mortgage Subsidy
You have a federal mortgage subsidy if
you 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 you could
use to reduce your federal income taxes.

You may also have a federal mortgage
subsidy if, when you bought your home,
either:
1. You assumed the seller's obligation
on a QMB-funded loan, provided that you
were qualified to obtain a loan from the
proceeds of a QMB, or
2. The seller's MCC was transferred to
you with the approval of the issuer and
both the following apply:
a. You met the eligibility requirements
needed to get an MCC, and
b. The issuer of the MCC issued you a
replacement MCC.

Recapture Tax

If you sold or otherwise disposed of your
home during the first 9 years after you
received a federally subsidized QMB or
MCC loan, you may have to pay back
(recapture) all or part of the federal
mortgage subsidy you received by
increasing your federal income tax for the
year in which you sold or disposed of your
home. Refinancing of a federally
subsidized loan without a sale or
disposition of the home does not result in
recapture, but a later sale or disposition
after the refinancing may result in
recapture.

Who Must File

You must file this form if all of the following
apply. (For exceptions, see Special Rules
later.)

Aug 1, 2024

When and Where To File

Attach Form 8828 to your Form 1040,
1040-SR, or 1040-NR for the tax year in
which you sold or otherwise disposed of
your home. File it with your tax return
when it’s due (including extensions).

Special Rules

Giving away your home. If you gave
away your home (other than to your
spouse or ex-spouse incident to divorce),
you must figure your recapture tax as if
you had actually sold your home for its fair
market value at the time of the disposition.

Divorce. The transfer of an interest in the
home by one spouse (or former spouse) to
another does not result in recapture tax to
either person (do not file this form) if:
• It is incident to divorce, and
• No gain or loss was included in or
deducted from income on your return.
See Pub. 504, Divorced or Separated
Individuals, for situations where gain or
loss is included in or deducted from
income on the transfer incident to divorce.
Destruction by casualty. If your home is
destroyed by fire, storm, flood, or other
casualty, there generally is no recapture
tax if you replace the home (for use as
your main home) on its original site. In
general, the period for replacement is
limited to 2 years after the end of the tax
year when the destruction happened. If
you do not replace the home in time, you
must file Form 8828 with Form 1040X,
Amended U.S. Individual Income Tax
Return, for the year the home was
destroyed.
In certain circumstances, the
replacement period may be extended if
the home is located in a federally declared
disaster area and is destroyed by reason
of that disaster. For more information, see
Pub. 547, Casualties, Disasters, and
Thefts.
Two or more owners. In general, if two
or more persons own a home and are
jointly liable for the federally subsidized
mortgage loan, figure the actual recapture
tax separately for each, based on the
interest of each in the home.
Cat. No. 14075L

Qualified rehabilitation loan. A
qualified rehabilitation loan (QRL) is a loan
funded by a QMB for the rehabilitation of a
home provided that:
• There were at least 20 years between
the date of the building's first use and the
date rehabilitation began,
• A certain percentage of the walls and
framework was retained in place,
• The rehabilitation costs amounted to 25
percent or more of your adjusted basis in
the building after the rehabilitation, and
• You were the first occupant of the home
after the rehabilitation was completed.
If you sold or disposed of this
rehabilitated building that was your home
within 9 years after you received the QRL,
you must recapture the federal mortgage
subsidy. See section 143(k)(5) for details.
Special rules may apply for certain
residences destroyed in a federally
declared disaster. See section 143(k)(13)
for more details.
Home improvement loan. There is
no recapture of the federal mortgage
subsidy if, instead of a QRL, you received
a qualified home improvement loan (QHIL)
funded by a QMB. A QHIL is limited to
$15,000 and must be used for alterations,
repairs, and improvements that protect or
improve the basic livability or energy
efficiency of your home. See section
143(k)(4) for details.
Qualifying subordinate mortgage loan
(or grant). A qualifying subordinate
mortgage loan (or grant) (QSML) is a loan
that can be made in addition to any QMB
or MCC federally subsidized financing. To
receive a QSML, you must agree that if
you sell your home within a 9-year period,
you either sell according to certain terms
or share any gain with the QSML
governmental lender. See section 143(k)
(10). If you had a QSML, see the line 13
instructions.
Refinancing your home. Proceeds from
a QMB cannot be used to refinance a
home mortgage. However, replacement of
construction period, bridge, or similar
temporary financing used when you first

purchased your home is not treated as
refinancing.
If, once you have received permanent
financing from the proceeds of a QMB, the
home is refinanced (with conventional
financing), the federal subsidy on your
original QMB loan is subject to recapture
when you sell or dispose of your home
within the 9-year recapture period. If you
refinance within the first 4 years after the
closing date of the original loan, you have
to adjust your holding period percentage
as if your loan was fully repaid on the date
of the refinancing. See the Holding Period
Percentage Worksheet later.

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 tax return.

This may be less than 100% if someone
else also has an interest in the home (see
Special Rules earlier).
Line 9. This item applies to both sales
and other dispositions (see Giving away
your home under Special Rules earlier). 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 earlier).

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Reissuance of an MCC. An MCC can
be reissued in a refinancing if all of the
following conditions are met.
1. The issuer reissues an MCC to
replace your existing MCC, which can be
the original MCC, an MCC issued to a
transferee under Regulations section
1.25-3(p), or an MCC previously reissued
under the refinancing provisions.
2. The reissued MCC takes effect
beginning with the date you refinanced
your home (refinancing closing date).
3. The reissued MCC:
a. Applies to the same property as
your existing MCC,
b. Replaces entirely your existing
MCC,
c. Specifies a mortgage debt that
does not exceed the outstanding debt
balance on your existing MCC,
d. Does not increase the certificate
credit rate specified on the existing MCC,
and
e. Does not increase the allowable
credit under your existing certificate for
any tax year.

Repayment of the loan. Your holding
period percentage (line 20) may be
reduced (see the line 20 instructions) if
you:
• Repay your loan in full or refinance
other than with reissuance of an MCC (as
described above) within the first 4 years
after the closing date of your original loan,
and
• Sell or dispose of your home later
during the 9-year recapture period.
Other special rules may apply in certain
cases. See section 143(m).

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
2

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 tax return (if different).
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 earlier).
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.

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) earlier.

Line 15. Figure your modified adjusted
gross income as follows:
• Begin with: Your adjusted gross
income as shown on line 11 of your Form
1040, 1040-SR or 1040-NR.
• 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
Instructions for Form 8828 (Rev. 11-2024)

Keep for Your Records

Holding Period Percentage Worksheet

Worksheet for figuring the holding period percentage if you fully repaid the original federally subsidized loan:
(1) before the date of sale or disposition of your home, and
(2) within the first 4 years after the closing date of the original loan.
(Do not use this worksheet if lines 6 and 8 of Form 8828 are the same date.)
A.

Closing date of original loan. Enter the date from Form 8828, line 5

...............................

A.

......................................

B.

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October 1, 2024

Month/Day/Year

B.

Repayment date. Enter the date from Form 8828, line 8

If the repayment date on line B is more than 4 years after the closing date on line A, do not use this
worksheet.

C.

Enter the number of years between the dates on lines A and B. Round up to the nearest whole year . . . . . . . . . .

Month/Day/Year

C.

Years

D.

E.

If the number of years on line C is:

Enter this percentage:

1.

...........................................

20%

2.

...........................................

40%

3.

...........................................

60%

4.

...........................................

80%

D.

Sale date. Enter the date from Form 8828, line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

%

E.

Month/Day/Year

F.

Enter the number of years between the dates entered on lines B and E. Round up to the nearest whole
year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F.

Years

G.

If the number of years on line F is:
1

...........................................

100%

2

...........................................

80%

3

...........................................

60%

4

...........................................

40%

5

...........................................

20%

6 or more

H.

Enter this percentage:

.....................................

G.

%

Multiply the percentage on line D by the percentage on line G. Round to the nearest whole percentage. This
is your adjusted holding period percentage to enter on line 20 of Form 8828. If this percentage is zero, you will
have no recapture, but you still must complete and file Form 8828 . . . . . . . . . . . . . . . . . . . . . . . . . . . . H.

%

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.

Instructions for Form 8828 (Rev. 11-2024)

0%

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
Holding Period Percentage Worksheet to
redetermine your holding period
percentage for line 20.

3