Connecticut Mortgage Loans CHFA

[Nicole Grenier]

Hello Everyone! Looking for some help understanding all the tax implications of a CHFA loan.  There is an IRS tax recapture if 3 things happen:

1. I sell within 9 years

2. Make over a certain salary at time of sale

3. Profit a certain amount when I sell.

I am currently going through the process of obtaining a CHFA loan and I am worried about the above 3 rules.  Anyone have any info on the limits/how to calculate?  I called CHFA and they could not give me any specifics.  I also found some info online but am have trouble doing calculations on my own.   Any help is much appreciated!

[Scott Hollister]

@Nicole Grenier,

1. What are the benefits for YOU using the CHFA product? (Besides low interest rates, low income, etc.)
2. What is your plan with the property? 
3. How many years do you have to live there? And can you rent it out after? (I remember them being strict on the guidelines, but I have personally not used them so I don't remember)
4. Are you buying an investment property?

The reason I ask about:

• Benefits: I want to make sure you are using the best loan product for your current situation. There are many products that may be better and I don't want you to pick one that doesn't fit your needs. (FHA, 10% Conventional, USDA, VA if you're military, etc.)
• Plan with the property: I want to know your long term vision, I would assume you plan to hold for at least 9 years, otherwise there are the tax implications. (Sorry I don't know about calculating the tax implications)
• Can you rent: I ask this because your situation may change and you might want to move, if there is a clause in the contract that you cannot rent, you will be forced to sell with a result in tax recapture. 
• Are you buying right: I ask because just in case you get "stuck" by losing a job or some life experience happens, will you be able to cover the mortgage payment by yourself? (Hinting house hack. Or maybe it is a single family with roommates, etc.)

I always have red flag questions when you have someone telling you what to do with your property. Having exit strategies and investing wisely (House Hack) will put you in a better position financially, and that is why we are all here on BP.