Schedule O - Housing Development Project Credit (Page 3 of 3) in pdf

HOUSING DEVELOPMENT PROJECT CREDIT INSTRUCTIONS

To encourage capital investment in this State, thereby increasing employment and economic development, a West Virginia

Business and Occupation Tax Credit is allowed to eligible taxpayers for certain housing development project expenditures in

this state.

A qualified housing development project is a residential housing development, located in West Virginia, that contains five (5) or

more single family contiguous residential housing units or multi- family residential buildings containing five (5) or more residential

housing units, which are contiguously located.

A residential housing unit is any single family dwelling, or a single family unit in a multi-family dwelling, that is constructed for

sale or lease to non-transients for use and occupancy as their primary residence.

An eligible taxpayer is one who purchases property or services (or both) for the purpose of constructing a qualified housing

development project in this state.

Property purchased for a qualified housing development project includes real property, and improvements thereto, and tangible

personal property incorporated into real property (whether or not attached), but only if such real or tangible personal property

was constructed or purchased on or after July 1, 1986 for use as a component part of a housing project located in West Virginia.

The eligible investment is the cost of land and depreciable property purchased for the construction of a qualified housing

development project which is placed in service, in this state, during the tax year.

The cost of each item of property purchased for the conduct of an eligible housing development project may not include trade-

in; insurance proceeds received in compensation for loss of property damaged, destroyed or stolen; or property used to determine

the eligible investment for the Industrial Expansion and Industrial Revitalization credits.

The cost of self constructed property, which may be included, is the amount properly charged to the capital account for federal

depreciation purposes.

The amount of allowable credit is ten percent (10%) of the eligible investment and is applied over a ten (10) year period at the

rate of one-tenth (1/10) of the allowable credit per taxable year, beginning with the taxable year in which any combination of

residential housing units, available for occupancy or occupied in the qualified housing development, is five (5) or more residential

housing units.

The annual allowable credit is claimed against the West Virginia Business and Occupation Tax imposed by Section 2C (Business

of Selling Tangible Property) and Section 2e (Business of Contracting) of Article 13, Chapter 11, of the West Virginia Code.

The credit may not reduce the tax liability by more than fifty percent (50%). On or after July 1, 1987, the credit may be claimed

against the Business and Occupation Tax, the Severance Tax and/or The Business Franchise Tax. There is no provision for

carry over or carry back of the annual credit allowance.

If you are entitled to claim the Industrial Expansion Credits; the Industrial Revitalization Credit; the Industrial Expansion or

Revitalization Credit; or the Research and Development Credit; (or any combination of these credits), the total amount of all

credits allowed may not exceed the fifty percent (50%) rule.

If, during any taxable year, property with respect to which the tax credit has been allowed is disposed of prior to the end of its

useful life; ceases to be used in the qualified housing development project of the taxpayer in this state prior to the end of its useful

life or if the taxpayer ceases operation of the housing project before expiration of the useful life of the property (except when the

cessation is due to fire, flood, storm, or other casualty), the unused portion of the credit is forfeited and the amount of the credit

allowed in earlier years must be redetermined and additional taxes, plus interest and applicable penalties that result from a

reduction of the credit will be due and payable.

Schedule O - Housing Development Project Credit Page 3