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Recapture tax is no longer an obstacle for participants in the Ohio Housing Finance Agency's First-Time Homebuyer Program.
Hearing the term "recapture tax" when completing the home buying process might make any potential buyer think twice. The phrase is associated with OHFA's First-Time Homebuyer Program and is one that may seem overwhelming, especially to a first-time homebuyer. Recapture tax is an aspect of the program, but is not one that presents an insurmountable obstacle to homebuyers. With a new initiative, OHFA will help give potential homebuyers peace of mind.
Recapture was inserted in Section 143(m) of the Internal Revenue Code (IRC) of 1986. The Internal Revenue Service (IRS) authorized housing finance agencies to sell tax-free bonds to provide affordable housing funding and inserted the recapture provision to assure compliance with their stated purpose of helping low- to moderate-income homebuyers. Under this provision of the IRC, if a homeowner who participated in the First-Time Homebuyer Program sold their home within the first nine years of the purchase date, exceeded the maximum income limit and exceeded the sales price limitations, they could be subject to paying a recapture tax.
After doing research into the past implementation of the recapture tax for homebuyers, OHFA found that few people have ever had to pay this tax for selling their home early. To help remove obstacles for potential homebuyers, the Agency is willing to help homeowners pay in the event of recapture.
Effective March 1, 2006, OHFA will reimburse homebuyers for the actual amount of recapture tax paid to the IRS on loans closed on or after the effective date. To complete the reimbursement process, the Request for Recapture Tax Reimbursement must be completed and returned to the Ohio Housing Finance Agency, Attn: Assistant Director, Office of Homeownership, 57 East Main Street, Columbus, Ohio 43215.
The Request for Recapture Tax Reimbursement is in Adobe PDF file format and must be viewed with Adobe Reader. If you do not have Adobe Reader, a free version can be downloaded from Adobe's web site.
- Request for Recapture Tax Reimbursement
By eliminating this barrier for potential homebuyers, OHFA furthers the mission to provide safe, quality, affordable housing to residents. Removing the fear of recapture will allow First-Time Homebuyer Program participants throughout Ohio to purchase homes with confidence creating strong communities.
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