LIHTC recapture surety bonds.
From $100. Enter your amount.
A Section 42 Low-Income Housing Tax Credit project carries a 15-year federal compliance period, and if the ownership interest changes hands before it runs, the credits already claimed can be recaptured with interest. The IRS itself stopped accepting a surety bond in lieu of recapture back in 2008, but many tax-credit investors and syndicators still require one privately before they'll consent to an early transfer — collateral that protects them, not a government filing. Premium is priced at 2% of the bond amount, $100 minimum — enter the amount your investor requires and your exact price appears at the application.
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A recapture bond at a routine coverage amount is ordinary commercial surety — no committee, no lengthy underwriting. Here is the whole thing:
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Your entity type and FEIN, owner details, the bond amount your investor or syndicator specifies, and an effective date. The form closes with a credit consent that authorizes a soft inquiry only.
Issued the moment you pay
Recapture bonds at routine amounts approve on the spot, and the executed bond generates as soon as payment clears. The consent authorizes a soft credit pull only — a soft inquiry that never affects your score. A large penal sum can draw a short review before the bond releases.
Deliver it to your investor
Your executed bond and power of attorney arrive by email, ready to send to your tax-credit investor or syndicator so the transfer can close. Wet-ink originals mailed on request.
What it is and who needs it.
What the LIHTC recapture bond actually guarantees
Under Internal Revenue Code Section 42, a low-income housing project has to stay in compliance for a 15-year federal compliance period (with an extended-use period that typically runs longer) to keep the tax credits it already claimed. If an ownership interest changes hands and the new owner does not post a bond or otherwise guarantee continued compliance, the IRS can require the credit to be recaptured — repaid with interest — for the years remaining in the compliance period. Section 42(j)(6) once let a taxpayer avoid immediate recapture on disposition by maintaining a Treasury-approved surety bond (filed on IRS Form 8693) or a Treasury Direct Account instead.
That IRS bonding option no longer exists in practice: the Housing Assistance Tax Act of 2008 amended §42(j)(6), and the IRS confirmed it no longer requires or accepts a disposition bond to avoid recapture on an ownership change. This page is not that filing, and there is no current IRS process it satisfies. What it is instead: many institutional tax-credit investors and syndicators, who carry the real economic exposure if a project falls out of compliance, will not consent to an owner transferring or restructuring its interest before the compliance period ends unless the transferring party posts collateral of its own — commonly structured as a surety bond running to the investor or its assignee as obligee.
It is the usual three-party arrangement — you (the principal, typically the general partner or managing member transferring its interest), the surety carrier, and your tax-credit investor (the obligee) — and it is not insurance for you: if the surety pays a claim to the investor for recapture tax and interest the transfer triggered, you repay the surety. There is no fixed statutory amount; the investor sizes the bond to its own recapture and interest-penalty exposure on the property, and that is the figure to confirm before you apply.
You need this bond if you are
One application, issued the moment you pay.
These are the actual issuing fields — entity type and FEIN, owner details, and the bond amount your investor or syndicator specifies. The form closes with a consent that authorizes a soft credit inquiry only.
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From $100, priced at 2% of the bond amount. Enter the coverage amount your investor specifies and close on schedule. Free until issued.