The military’s Homeowner’s Assistance Program (HAP) has been in place for decades to help homeowners who have trouble selling their homes because of a Base Realignment and Closure (BRAC) initiative. The latest round of BRAC closures happened to coincide with the recent housing market crisis in America. A new addition to HAP was added in 2009 as part of the American Economic Recovery Act and includes protection to members of the military who are forced to move because of a permanent change of station or PCS move and lost value on the price of their home. The old and new versions of the law provide some monetary relief to eligible members of the military and federal employees who suffered a financial loss on the sale of their primary residence when they were not able to sell their homes under reasonable terms or conditions.
There Are Two Versions Of The Homeowner’s Assistance Program
There are two versions of the Homeowners Assistance Program: conventional and expanded. The conventional HAP was established by Congress in1966. It is only available for members of the military when the services conduct a round of base closures. The HAP is a special relief program that must be approved to start, and then it provides financial assistance to homeowners who are not able to sell their homes under reasonable terms because an announced closure that adversely affects the real estate market of a local area. The Army Corps of Engineers runs HAP on behalf of all the military branches. The expanded HAP is exactly like the conventional version, but it has been modified recently to include wounded service members, surviving spouses of military members who are killed in combat, and other members of the military who receive permanent change of station (PCS) orders.
Conventional Homeowner’s Assistance Program Is Taxable
The conventional HAP benefits payments are taxable. Members of the military owe taxes on support they receive when the support is above 95% of the prior fair market value (PFMV) of his or her home. For more information on the Conventional Homeowner’s Assistance Program, you should view the HAP website and the Army Corps of Engineers’ FAQ page.
Expanded Homeowner’s Assistance Program Is Not Taxable
Originally, the Expanded Homeowner’s Assistance Program and specifically the PCS clause was not tax exempt. President Obama signed HR 3548 which is the Unemployment Compensation Extension Act of 2009. He signed the bill into law which also included a new exception for Expanded HAP benefit payments from federal taxes. Payments to military members are also not subject to social security or Medicare taxes. Although HAP is exempt from Federal taxes, there may be state taxes that military members may have to pay. Applicants who had taxes withheld prior to the President signing the law change should receive a W2c which is a corrected Wage and Tax Statement from the Internal Revenue Service.
As with any complicated tax situation, HAP applicants should seek legal and tax assistance if there are any specific questions about the tax implications of HAP benefit payments. The military’s Homeowner’s Assistance Program (HAP) is a viable option for members of the Armed Forces who have had trouble selling their homes during the recent housing crisis. View the eligibility requirements and how to file for benefits at the Homeowner’s Assistance Program (HAP) website.