Form 8609 - Low-Income Housing Credit Allocation Certification (Page 3 of 4) in pdf

Form 8609 (Rev. 1-93)

Page

allocation. If no allocation is required (i.e.,

Except as explained in the instructions

Part II—First-Year

50% or greater tax-exempt bond financed

for line 3b, below, the eligible basis for a

Certification

building), leave line 1a blank.

new building is its adjusted basis as of the

close of the first tax year of the credit

Completed by Building Owner for

Line 1b.—Enter the housing credit dollar

period. For an existing building, the eligible

amount allocated to the building for each

the First Year of Credit Period

basis is its acquisition cost plus capital

year of the 10-year credit period. The

Only

improvements through the close of the first

amount should equal the amount on line 2

Note: Form 8609 is invalid unless Part I is

tax year of the credit period. See the

multiplied by the amount on line 3a. For

completed by the appropriate housing

instructions for Part II, line 7b, and section

tax-exempt bond projects for which no

credit agency.

42(d) for other exceptions and details.

allocation is required, enter the housing

Line 7a.—See the instructions for Part I,

credit dollar amount allowable under

Line 3b. Special rule to increase basis

line 5. This date must correspond with the

section 42(m)(2)(B).

for buildings placed in service in

date certified to the housing credit agency.

calendar years beginning after 1989.—If

Line 2.—Enter the maximum applicable

Line 7b.—Enter the eligible basis (in dollar

the building is located in a high-cost area

credit percentage allocated to the building

terms) of the building. Determine eligible

(i.e., a “qualified census tract” or a

for the month the building was placed in

basis at the close of the first year of the

“difficult development area”), the eligible

service or, if applicable, for the month

credit period (see sections 42(f)(1), 42(f)(5),

basis may be increased as follows:

determined under section 42(b)(2)(A)(ii).

and 42(g)(3)(B)(iii) for determining the start

For new buildings, the eligible basis may

If an election is made under section

of the credit period).

be up to 130% of such basis determined

42(b)(2)(A)(ii) to use the applicable

For new buildings, the eligible basis is

without this provision.

percentage for a month other than the

generally the cost of construction or

month in which a building is placed in

For existing buildings, the rehabilitation

rehabilitation expenditures incurred under

service, the requirements in Notice 89-1

expenditures under section 42(e) may be

section 42(e).

must be met. The agency must keep a

up to 130% of the expenditures

For existing buildings, the eligible basis

copy of the binding agreement and the

determined without regard to this

is the cost of acquisition plus rehabilitation

election statement and file the original with

provision.

expenditures not treated as a separate

the agency’s Form 8610 for the year the

Enter the percentage by which eligible

new building under section 42(e) incurred

allocation is actually made. The maximum

basis was increased. For example, if the

by the close of the first year of the credit

applicable credit percentage is published

eligible basis was increased by 120%,

period.

monthly by the IRS in the Internal Revenue

enter 120. See section 42(d)(5)(C) for

Bulletin. For new buildings that are not

If the housing credit agency has entered

definitions of a qualified census tract and a

federally subsidized under section

an increased percentage in Part I, line 3b,

difficult development area, and for other

42(i)(2)(A) when placed in service, use the

multiply the eligible basis by the increased

details.

applicable percentage for the 70% present

percentage and enter the result.

Note: Before increasing eligible basis, the

value credit. For new buildings that are

Residential rental property may qualify

eligible basis must be reduced by any

federally subsidized when placed in

for the credit even though part of the

Federal subsidy that the taxpayer elects to

service, or existing buildings, use the

building in which the residential rental units

exclude from eligible basis and any Federal

applicable percentage for the 30% present

are located is used for commercial use. To

grant received.

value credit. A taxpayer may elect under

figure the eligible basis of the property, do

Line 4.—Enter the percentage of the

section 42(i)(2)(B) to reduce eligible basis

not include the cost of the nonresidential

aggregate basis of the building financed by

by the principal amount of any outstanding

rental property. However, you may

certain tax-exempt bonds. If this amount is

below-market Federal loan or the proceeds

generally include the basis of common

zero, enter zero (do not leave this line

of any tax-exempt obligation in order to

areas or tenant facilities, such as

blank).

obtain the higher credit percentage (see

swimming pools or parking areas, provided

Line 5.—The placed-in-service date for a

Part II, line 9a).

there is no separate fee for the use of

residential rental building is the date on

For allocations to buildings for additions

these facilities and they are made available

which the first unit in the building is ready

to qualified basis under section 42(f)(3), do

on a comparable basis to all tenants in the

and available for occupancy under state or

not reduce the maximum applicable credit

project. See section 42(d).

local law. Rehabilitation expenditures

percentage even though the building owner

You may elect to reduce the eligible

treated as a separate new building under

may only claim a credit based on

basis by the principal amount of any

section 42(e)(4)(A) are placed in service at

two-thirds of the credit percentage

outstanding below-market Federal loan or

the close of any 24-month period over

allocated to the building.

the proceeds of any tax-exempt obligation

which the expenditures are aggregated,

Line 3a.—Enter the maximum qualified

to obtain a higher credit percentage. If you

whether or not the building is occupied

basis of the building. To figure this,

make this election, check the Yes box in

during the rehabilitation period.

multiply the eligible basis of the qualified

Part II, line 9a, and reduce the eligible

Line 6.—A building is treated as federally

low-income building by the smaller of:

basis by the principal amount of such loan

subsidized if at any time during the tax

or obligation proceeds before entering the

1. The percentage of low-income units to

year or any prior tax year there is

amount on line 7b. In addition, you must

all residential rental units (the “unit

outstanding any tax-exempt bond

reduce the eligible basis by the amount of

percentage”), or

financing or any below-market Federal

any Federal grant received.

2. The percentage of floor space of the

loan, the proceeds of which are used

Note: You must reduce the eligible basis

low-income units to the floor space of all

(directly or indirectly) for the building or its

by the principal amount of such loan or

residential rental units (the “floor-space

operation.

obligation proceeds or any Federal grant

percentage”).

Note: Generally, no credit is allowable for

received before multiplying the eligible

Generally, a unit is not treated as a

acquisition of an existing building after

basis by the increased percentage in Part I,

low-income unit unless it is suitable for

1989 unless substantial rehabilitation is

line 3b.

occupancy and is used other than on a

done. See sections 42(d)(2)(B)(iv) and

The eligible basis must also be reduced

transient basis. Section 42(i)(3) provides for

42(f)(5). DO NOT issue Form 8609 for

by the entire basis allocable to

certain exceptions (e.g., units that provide

acquisition of an existing building unless

non-low-income units that are above the

for transitional housing for the homeless

substantial rehabilitation under section

average quality standard of the low-income

may qualify as low-income units). See

42(e) is placed in service.

units in the building. You may, however,

sections 42(i)(3) and 42(c)(1)(E) for more

include a portion of the basis of these

information.

Form 8609 - Low-Income Housing Credit Allocation Certification Page 3

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