What is a Recapture Penalty and will I have to pay one if I pay off my MassHousing mortgage loan?
If your mortgage loan was financed with funds made available by MassHousing through the sale of tax-exempt Mortgage Revenue Bonds (an MRB Loan), current federal tax law may require you to pay a subsidy recapture to the federal government if you sell or otherwise transfer your house within the first nine years after the closing date of the mortgage loan. If you refinance your mortgage loan within the first nine years but do not otherwise sell or transfer your home, no subsidy recapture will be due at the time of the refinancing. However, you may have to make a payment of subsidy recapture if you subsequently sell or otherwise transfer your home within the original nine-year period. Please contact your local IRS office or your tax advisor for assistance with calculating the Recapture Tax. MassHousing is not responsible for the calculation, collection or payment of any Recapture Tax to the IRS. However, if your mortgage loan was closed on or after January 1, 2006, MassHousing will reimbur
