Common use of Limitations and Special Rules on Recapture Tax Clause in Contracts

Limitations and Special Rules on Recapture Tax. 1. If you give away your single family residence (other than to your spouse or ex-spouse incident to divorce), you must determine your actual recapture tax as if you had sold your single family residence for its fair market value. 2. If your single family residence is destroyed by fire, storm, flood, or other casualty, there generally is no recapture tax if, within two years, you purchase additional property for use as your principal residence on the site of the single family residence financed with your original subsidized mortgage loan. 3. In general, except as provided in future regulations, if two or more persons own a single family residence and are jointly liable for the subsidized mortgage loan, the actual recapture tax is determined separately for them based on their interests in the single family residence. 4. If you repay your loan in full during the nine year recapture period and you sell your single family residence during this period, your holding period percentage may be reduced under the special rule in section 143(m)(4)(C)(ii) of the Internal Revenue Code. 5. Other special rules may apply in particular circumstances. You may wish to consult with a tax advisor or the local office of the Internal Revenue Service when you sell or otherwise dispose of your single family residence to determine the amount, if any, of your actual recapture tax. See section 143(m) of the Internal Revenue Code generally.

Limitations and Special Rules on Recapture Tax. 1. If you give away your single family residence (other than to your spouse or ex-ex- spouse incident to divorce), you must determine your actual recapture tax as if you had sold your single family residence for its fair market value. 2. If your single family residence is destroyed by fire, storm, flood, or other casualty, there generally is no recapture tax if, within two years, you purchase additional property for use as your principal residence on the site of the single family residence financed with your original subsidized mortgage loan. 3. In general, except as provided in future regulations, if two or more persons own a single family residence and are jointly liable for the subsidized mortgage loan, the actual recapture tax is determined separately for them based on their interests in the single family residence. 4. If you repay your loan in full during the nine year recapture period and you sell your single family residence during this period, your holding period percentage may be reduced under the special rule in section 143(m)(4)(C)(ii) of the Internal Revenue Code. 5. Other special rules may apply in particular circumstances. You may wish to consult with a tax advisor or the local office of the Internal Revenue Service when you sell or otherwise dispose of your single family residence to determine the amount, if any, of your actual recapture tax. See section 143(m) of the Internal Revenue Code generally.. Single Family Residence is located in: ( ) Targeted Areas