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

Form 8609 (Rev. 1-93)

Page

non-low-income units if the cost of any of

Note: Section 42(g)(3)(B)(iii) provides

Signature

these units (a) does not exceed by more

special rules for determining the start of

Because Form 8609 requires an original

than 15% the average cost of all

the credit period for certain multiple

signature each year and the form is not

low-income units in the building, and (b)

building projects.

issued annually by the housing credit

you elect to exclude this excess cost from

(b) Section 42(j)(5) requires partnerships

agency, complete the following steps after

the eligible basis by checking the Yes box

with 35 or more partners to be treated as

you receive the form from the agency:

for line 9b.

the taxpayer for purposes of recapture

1. Complete Part II of the form (do not

Finally, the eligible basis may not include

unless an election is made not to treat the

sign it).

any portion of a building’s adjusted basis

partnership as the taxpayer. Check the Yes

for which an election was made under

box if you do not want the partnership to

2. After completing Part II, make a copy

section 167(k) prior to November 5, 1990.

be treated as the taxpayer for purposes of

of the form.

recapture.

Line 8a.—Multiply the eligible basis of the

3. SIGN THE COPY, and keep the

building shown on line 7b by the smaller of

original copy you receive from the housing

the unit percentage or the floor space

housing project must meet the minimum

credit agency so that copies can be made

percentage as of the close of the first year

set-aside requirements under section 42(g)

from the unsigned original copy and used

of the credit period. Low-income units are

by electing one of the following tests:

for filing with your future years’ income tax

units occupied by qualifying tenants, while

(1) 20-50 Test: 20% or more of the

returns.

residential rental units are all units, whether

residential units in the project must be

4. Complete Schedule A (Form 8609) for

or not occupied. See the instructions for

both rent restricted and occupied by

each building and attach it to the signed

Part I, line 3a, above.

individuals whose income is 50% or less of

copy of Form 8609 you attach to your

the area median gross income, or (2) 40-60

Line 8b.—Check the appropriate box on

income tax return. See the instructions for

Test: 40% or more of the residential units

line 8b to indicate whether or not the

Schedule A for details on completing

in the project must be both rent restricted

building for which basis is entered on line

Schedule A. You can get Schedule A from

and occupied by individuals whose income

8a is part of a multiple building project. A

most Internal Revenue Service offices.

is 60% or less of the area median gross

multiple building project is a project that

5. If the maximum applicable credit

income.

includes more than one qualified

percentage allocated to the building in Part

low-income building that must (a) be

Note: Owners of buildings in projects

I, line 2, reflects an election made under

located on the same tract of land (unless

located in New York City may not use the

section 42(b)(2)(A)(ii), the taxpayer must

all of the dwelling units in the project are

40-60 test. Instead, they may use a 25-60

attach a copy of the election statement

low-income units), (b) be owned by the

test: 25% or more of the residential units in

and, if the binding agreement specifying

same person for Federal income tax

the project must be both rent restricted

the housing credit dollar amount is

purposes, (c) be financed under a common

and occupied by individuals whose income

contained in a separate document, a copy

plan of financing, and (d) have similarly

is 60% or less of the area median gross

of the binding agreement to Form 8609 for

constructed housing units. See section

income (see also section 142(d)(6)).

the first tax year in which the credit is

42(g)(7). A qualified low-income building

Caution: The minimum set-aside

claimed. (See Notice 89-1.)

includes residential rental property that is

requirement must be met by the close of

6. If the housing credit dollar amount

an apartment building, a single family

the first year of the credit period in order to

allocated in Part I, line 1b, reflects an

dwelling, a townhouse, a rowhouse, a

claim any credit for the first year or for any

allocation made under section 42(h)(1)(E) or

duplex, or a condominium. Taxpayers must

subsequent years.

42(h)(1)(F), the taxpayer must attach a

check the Yes box if they are electing

(d) The deep-rent-skewed 15-40 election

copy of the allocation document to Form

under section 42(g)(3)(B) to aggregate

is not an additional test for satisfying the

8609 for the first tax year in which the

buildings to satisfy the minimum set-aside

minimum set-aside requirements of section

credit is claimed. (See Notice 89-1.)

requirement elected for the project under

42(g). The 15-40 test is an election that

section 42(g)(1).

Except as instructed in the Note to

relates to the determination of a

Line 9a.—Section 42(i)(2)(B) allows an

owners in When To File on page 2, Form

low-income tenant’s income. Generally, a

8609 must be attached to Form 8586 and

owner to elect to reduce the eligible basis

continuing resident’s income may increase

filed with your income tax return each year

by the principal amount of any outstanding

up to 140% of the applicable income limit

during the compliance period beginning

below-market Federal loan or the proceeds

(50% or less OR 60% or less of the area

with the first year the credit is claimed.

of any tax-exempt obligation and claim the

median gross income under the minimum

70% present value credit on the remaining

set-aside rules in (c) above). When the

Note: If you received more than one

eligible basis. However, if such an election

deep-rent-skewed election is made, the

allocation (e.g., an allocation the year the

is made, the taxpayer may not claim the

income of a continuing resident may

building was placed in service and a

30% present value credit on the portion of

increase up to 170% of the applicable

second allocation based on an addition to

the basis that was financed with the

income limit. If this election is made, at

qualified basis), attach signed copies of

below-market Federal loan or the

least 15% of all low-income units in the

both Forms 8609 to your return.

tax-exempt obligation.

project must be occupied at all times

Line 9b.—See the instructions for Part II,

during the compliance period by tenants

line 7b, on page 3.

whose income is 40% or less of the area

median gross income. A deep-rent-skewed

Line 10.—Check the appropriate box for

project itself must meet the requirements

the election(s) you want.

of section 142(d)(4)(B).

(a) Section 42(f)(1) allows an owner of a

Once made, the elections under (a), (b),

building to elect to begin the credit period

(c), and (d) above cannot be revoked. For

in the tax year after the building is placed

details, see sections 42(g) and 142(d).

in service.

Form 8609 - Low-Income Housing Credit Allocation Certification Page 4

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