Instructions For Form 8609 - 2007 (Page 2 of 3) in pdf

Form 8609 (Rev. 12-2007)

Page

document used to make the allocation. If no

Except as explained in the instructions for line

Partnerships Act (as in effect on August 10,

allocation is required (i.e., 50% or greater

3b below, the eligible basis for a new building is

1993) or the Native American Housing

tax-exempt bond financed building), leave

its adjusted basis as of the close of the first tax

Assistance and Self-Determination Act of 1996

line 1a blank.

year of the credit period. For an existing

(as in effect on October 1, 1997) are not treated

building, the eligible basis is its acquisition cost

as federally subsidized if 40% or more of the

Line 1b. Enter the housing credit dollar amount

plus capital improvements through the close of

residential units in the building are occupied by

allocated to the building for each year of the

the first tax year of the credit period. See the

individuals whose income is 50% or less of the

10-year credit period. The amount should equal

instructions for line 3b and section 42(d) for

area median gross income (or national

the percentage on line 2 multiplied by the

other exceptions and details.

nonmetropolitan median gross income, when

amount on line 3a. As the housing credit agency

applicable). Buildings located in New York City

Line 3b. Special rule to increase basis for

is required to allocate an amount that is only

receiving this assistance are not treated as

buildings in certain high-cost areas. If the

necessary to assure project feasibility, the

federally subsidized if 25% or more of the

building is located in a high-cost area (i.e.,

percentage on line 2 and the amount on line 3a

residential units in the building are occupied by

“qualified census tract,” “difficult development

can be lowered by the housing agency. For

individuals whose income is 50% or less of the

area,” Gulf Opportunity (GO) Zone, Rita GO

tax-exempt bond projects for which no allocation

area median gross income.

Zone, or Wilma GO Zone), the eligible basis may

is required, enter the housing credit dollar

Not more than 90% of the state housing credit

be increased as follows.

amount allowable under section 42(h)(4).

ceiling for any calendar year can be allocated to

For new buildings, the eligible basis may be

projects other than projects involving qualified

Line 2. Enter the maximum applicable credit

up to 130% of such basis determined without

percentage allowable to the building for the

nonprofit organizations. A qualified nonprofit

this provision.

month the building was placed in service or, if

organization must own an interest in the project

applicable, for the month determined under

(directly or through a partnership) and materially

For existing buildings, the rehabilitation

section 42(b)(2)(A)(ii). This percentage may be

participate (within the meaning of section 469(h))

expenditures under section 42(e) may be up to

less than the applicable percentage published by

in the development and operation of the project

130% of the expenditures determined without

the IRS.

throughout the compliance period. See section

regard to this provision.

42(h)(5) for more details.

If an election is made under section

Enter the percentage to which eligible basis

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

Generally, no credit is allowable for acquisition

was increased. For example, if the eligible basis

a month other than the month in which a

of an existing building unless substantial

was increased to 120%, enter “120.” See

building is placed in service, the requirements of

rehabilitation is done. See sections 42(d)(2)(B)(iv)

section 42(d)(5)(C) for definitions of a qualified

Regulations section 1.42-8 must be met. The

and 42(f)(5). Do not issue Form 8609 for

census tract and a difficult development area,

agency must keep a copy of the binding

acquisition of an existing building unless

and for other details.

agreement. The applicable percentage is

substantial rehabilitation under section 42(e) is

Gulf Opportunity (GO) Zone, Rita GO Zone,

published monthly in the Internal Revenue

placed in service.

and Wilma GO Zone. The housing credit agency

Bulletin. For new buildings that are not federally

may increase the eligible basis of buildings in

Part II—First-Year

subsidized under section 42(i)(2)(A), use the

these specific zones if the buildings were placed

applicable percentage for the 70% present value

Certification

in service during the period beginning on

credit. For new buildings that are federally

January 1, 2006, and ending on December 31,

subsidized, or existing buildings, use the

2010. For more information, see section

Completed by Building Owner with respect

applicable percentage for the 30% present value

1400N(c)(3).

to the First Year of the Credit Period

credit. See the instructions for line 6 for the

Note. Before increasing eligible basis, the

definition of “federally subsidized.” A taxpayer

By completing Part II, you are

eligible basis must be reduced by any federal

may elect under section 42(i)(2)(B) to reduce

certifying the date the building is

subsidy which the taxpayer elects to exclude

eligible basis by the principal amount of any

placed in service corresponds to the

from eligible basis and any federal grant

outstanding below-market federal loan or the

date on line 5. If the

received.

proceeds of any tax-exempt obligation in order

CAUTION

Form 8609 issued to you contains

to obtain the higher credit percentage.

Line 4. Enter the percentage of the aggregate

the wrong date or no date, obtain a new or

basis of the building and land on which the

amended Form 8609 from the housing credit

For allocations to buildings for additions to

building is located that is financed by certain

agency.

qualified basis under section 42(f)(3), do not

tax-exempt bonds. If this amount is zero, enter

reduce the applicable percentage even though

Line 7. Enter the eligible basis (in dollars) of the

-0- (do not leave this line blank).

the building owner may only claim a credit based

building. Eligible basis does not include the cost

on two-thirds of the credit percentage allocated

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

of land. Determine eligible basis at the close of

to the building.

residential rental building is the date the first unit

the first year of the credit period (see sections

in the building is ready and available for

Line 3a. Enter the maximum qualified basis of

42(f)(1), 42(f)(5), and 42(g)(3)(B)(iii) for determining

occupancy under state or local law.

the building. In computing qualified basis, the

the start of the credit period).

Rehabilitation expenditures treated as a separate

housing credit agency should use only the

new building under section 42(e) are placed in

For new buildings, the eligible basis is

amount of eligible basis necessary to result in a

service at the close of any 24-month period over

generally the cost of construction or

qualified basis which, multiplied by the

which the expenditures are aggregated, whether

rehabilitation expenditures incurred under section

percentage on line 2, equals the credit amount

or not the building is occupied during the

42(e).

on line 1b. However, the housing credit agency

rehabilitation period.

is not required to reduce maximum qualified

For existing buildings, the eligible basis is the

basis and can lower the maximum applicable

Note. The placed-in-service date for an existing

cost of acquisition plus rehabilitation

building is determined separately from the

percentage on line 2. To figure this, multiply the

expenditures not treated as a separate new

placed-in-service date of rehabilitation

eligible basis of the qualified low-income building

building under section 42(e) incurred by the

by the smaller of:

expenditures treated as a separate new building.

close of the first year of the credit period.

If the housing credit agency has entered an

Line 6. Generally, a building is treated as

The fractional amount of low-income units to

increased percentage in Part I, line 3b, multiply

federally subsidized if at any time during the tax

all residential rental units (the “unit fraction”) or

the eligible basis by the increased percentage

year or any prior tax year there is outstanding

The fractional amount of floor space of the

and enter the result.

any tax-exempt bond financing or any

low-income units to the floor space of all

below-market federal loan, the proceeds of

Residential rental property may qualify for the

residential rental units (the “floor space

which are used (directly or indirectly) for the

credit even though part of the building in which

fraction”).

building or its operation. If a building is federally

the residential rental units are located is used for

subsidized, then box 6a or 6d must be checked

Generally, a unit is not treated as a

commercial use. Do not include the cost of the

regardless of whether the taxpayer has informed

low-income unit unless it is suitable for

nonresident rental property. However, you may

the housing credit agency that the taxpayer

occupancy, used other than on a transient basis,

generally include the basis of common areas or

intends to make the election under section

and occupied by qualifying tenants. Section

tenant facilities, such as swimming pools or

42(i)(2)(B) to reduce eligible basis by the principal

42(i)(3) provides for certain exceptions (e.g., units

parking areas, provided there is no separate fee

amount of any outstanding below-market federal

that provide for transitional housing for the

for the use of these facilities and they are made

loan or the proceeds of any tax-exempt

homeless may qualify as low-income units). See

available on a comparable basis to all tenants in

obligation.

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

the project.

information.

However, under section 42(i)(2)(E), buildings

receiving assistance under the HOME Investment

Instructions For Form 8609 - 2007 Page 2

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