Fillable Form N-586 - Tax Credit For Low-Income Housing (Page 3 of 4) in pdf

FORM N-586

(REV. 2011)

Page 3

net income tax liability reduced by all oth-

Low-Income Housing Tax

a reduction in qualified basis for which

er credits allowed the taxpayer under this

credits were allowable.);

Credit Loan

chapter.

•

The credit did not reduce your tax liabil-

ity; or

In lieu of the low-income housing tax

A tax credit which exceeds the taxpay-

credit, the taxpayer owning the qualified

•

er’s income tax liability may be used as a

The qualified basis is reduced because

low-income building placed in service after

credit against the taxpayer’s income tax li-

of a casualty loss, provided the property

December 31, 2011, may make a request

ability in subsequent years until exhausted.

is restored or replaced within a reason-

to the HHFDC for a loan. If the taxpayer

All claims for a tax credit must be filed on or

able period.

elects to receive the loan, the taxpayer shall

before the end of the twelfth month following

Specific Instructions

not be eligible for the low-income housing

the close of the taxable year for which the

tax credit.

credit may be claimed. Failure to properly

Part II

and timely claim the credit shall constitute a

Recapture of Credit

waiver of the right to claim the credit. A tax-

Tax Liability Limitations

payer may claim a credit only if the building

There is a 15-year compliance period

NOTE: For the purpose of this tax cred-

or project is a qualified low-income housing

during which the residential rental building

it, net income tax liability means net income

building or a qualified low-income housing

must meet certain requirements.

tax liability reduced by all other credits, ex-

project under section 42.

Note: If the decrease in qualified basis is

cept for the high technology business

If a subaward under section 1602 of

because of a change in the amount for which

investment tax credit and the technol-

the American Recovery and Reinvestment

you are financially at risk on the building,

ogy infrastructure renovation tax credit

Act of 2009, Public Law 111-5, has been

then you must first recalculate the amount

allowed under chapter 235, HRS. If you

issued for a qualified low-income building

of credit taken in prior years pursuant to

are also claiming the high technology

placed in service after December 31, 2011,

section 42(k) before you calculate the

business investment tax credit (Form

the amount of the low-income housing tax

recapture amount on this form.

N-318) or the technology infrastructure

credit that may be claimed by a taxpayer

renovation tax credit (Form N-326), com-

Generally, recapture applies if:

shall be equal to fifty percent of the amount

plete this form first, then Form N-318,

•

of the federal low-income housing tax

You dispose of a building or an owner-

then Form N-326.

credit that would have been allocated to

ship interest in it;

Line 8 — Enter the tax liability before any

the qualified low-incme building pursuant

•

There is a decrease in the qualified ba-

credits from the appropriate line of your tax

to section 42(b) had a subaward not been

sis of the building from one year to the

return.

awarded with respect to the qualified low-

next; or

income building.

•

Line 9 — The law requires that ALL other

The building no longer meets the mini-

credits except for the high technology busi-

mum set-aside requirements of section

ness investment tax credit and the technolo-

42(g)(1), the gross rent requirements of

The Hawaii Housing Finance and Devel-

gy infrastructure renovation tax credit offset

section 42(g)(2), or the other require-

opment Corporation (HHFDC), under the

a taxpayer’s tax liability BEFORE allowing

ments for the units which are set-aside.

Department of Business, Economic Devel-

a credit for low-income housing. Complete

opment and Tourism, is designated as the

Recapture does not apply if:

the Credit Worksheet on page 4 and enter

State housing credit agency to carry out

•

the result on line 9.

You disposed of the building or an own-

section 42(h) (with respect to limitation on

ership interest in it after July 30, 2008,

Line 11 — Compare the amounts on lines

aggregate credit allowable with respect to

and it is reasonably expected that the

7 and 10. Enter the smaller of line 7 or 10

projects located in the State). As the State

building will continue to be operated as

here. This is your maximum credit allowed

housing credit agency, the corporation shall

a qualified low-income building for the

for this taxable year.

determine the eligibility basis for a quali-

remainder of the building’s compliance

fied low-income building, make the alloca-

period;

Part III

tion of housing credit dollar amounts with

•

You disposed of an ownership interest in

the State, and determine the portion of the

To complete Part III of Form N-586 you

a building that you held through an elect-

State’s housing credit ceiling set aside for

will need copies of all the following feder-

ing large partnership;

projects involving qualified nonprofit organi-

al forms that you have filed: Form 8586,

•

The decrease in qualified basis does not

zations.

Low-Income Housing Credit, Form 8609,

exceed the additions to qualified basis

Low-Income Housing Credit Allocation Cer-

All claims for allocation of the low-in-

for which credits were allowable in years

tification, Form 8609-A Annual Statement

come housing credit under section 235-

after the year the building was placed in

for Low-Income Housing Credit, and Form

110.8, HRS, shall be filed with the HHFDC

service;

8611, Recapture of Low-Income Housing

at 677 Queen St., Suite 300, Honolulu, HI

•

You correct a noncompliance within a

Credit.

96813. The HHFDC shall determine the

reasonable period after it is discovered

amount of the credit allocation, if necessary,

Lines 1 through 7 — If the tax credit is

or should have been discovered. (How-

and return the claim to the taxpayer. The

recaptured from more than two buildings,

ever, recapture applies if any vacant unit

taxpayer shall file a credit allocation form is-

attach a schedule and enter the totals in the

of comparable or smaller size to the low-

sued by the HHFDC with the taxpayer’s tax

third column.

income units is rented to other than a

return with the Department of Taxation.

low-income tenant (on other than a tem-

If the tax credit recapture is only from a

porary basis) during any period when

flow-through entity (partnership, S corpora-

the project does not comply with the set-

tion, estate, or trust) skip lines 1-3 and go

aside requirement or has experienced

to line 4.

Form N-586 - Tax Credit For Low-Income Housing Page 3

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