Instructions For Form 8609 - 2016 (Page 3 of 5) in pdf

credit based on two-thirds of the credit percentage allocated

Note. Before increasing eligible basis, the eligible basis

to the building.

must be reduced by any federal subsidy which the taxpayer

elects to exclude from eligible basis. For buildings placed in

Line 3a. Enter the maximum qualified basis of the building.

service after July 30, 2008, the eligible basis cannot include

In computing qualified basis, the housing credit agency

any costs financed with federal grant proceeds.

should use only the amount of eligible basis necessary to

result in a qualified basis which, when multiplied by the

Line 4. Enter the percentage of the aggregate basis of the

percentage on line 2, equals the credit amount on line 1b.

building and land on which the building is located that is

However, the housing credit agency is not required to reduce

financed by certain tax-exempt bonds. If this amount is zero,

maximum qualified basis and can lower the maximum

enter -0-. Do not leave this line blank.

applicable percentage on line 2. To compute qualified basis,

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

multiply the eligible basis of the qualified low-income building

building is the date the first unit in the building is ready and

by the smaller of:

available for occupancy under state or local law.

The fractional amount of low-income units to all residential

Rehabilitation expenditures treated as a separate new

rental units (the “unit fraction”) or

building under section 42(e) are placed in service at the

The fractional amount of floor space of the low-income

close of any 24-month period over which the expenditures

units to the floor space of all residential rental units (the “floor

are aggregated, whether or not the building is occupied

space fraction”).

during the rehabilitation period.

Generally, the term "low-income unit" means any unit in a

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

building if the unit is rent-restricted and the individuals

determined separately from the placed-in-service date of

occupying the unit meet the income limitation applicable to

rehabilitation expenditures treated as a separate new

the project of which the building is a part. See section 42(g).

building.

Generally, a unit is not treated as a low-income unit unless it

is suitable for occupancy and used other than on a transient

Line 6. Not more than 90% of the state housing credit ceiling

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

for any calendar year can be allocated to projects other than

units that provide for transitional housing for the homeless

projects involving qualified nonprofit organizations. A

may qualify as low-income units). See sections 42(i)(3) and

qualified nonprofit organization must own an interest in the

42(c)(1)(E) for more information.

project (directly or through a partnership) and materially

Except as explained in the instructions for line 3b below,

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

the eligible basis for a new building is its adjusted basis as of

development and operation of the project throughout the

the close of the first tax year of the credit period. For an

compliance period. See section 42(h)(5) for more details.

existing building, the eligible basis is its acquisition cost plus

Generally, no credit is allowable for acquisition of an

capital improvements through the close of the first tax year of

existing building unless substantial rehabilitation is done. See

the credit period. See the instructions for line 3b and section

sections 42(d)(2)(B)(iv) and 42(f)(5) that were in effect on the

42(d) for other exceptions and details.

date the allocation was made. Do not issue Form 8609 for

acquisition of an existing building unless substantial

Line 3b. Special rule to increase basis for buildings in

rehabilitation under section 42(e) is placed in service.

certain high-cost areas. If the building is located in a

high-cost area (i.e., “qualified census tract,” “difficult

Lines 6a and 6d. A building is treated as federally

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

subsidized if at any time during the tax year or prior tax year

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

there is outstanding any tax-exempt bond financing, the

increased as follows.

proceeds of which are used (directly or indirectly) for the

building or its operation. If a building is federally subsidized,

For new buildings, the eligible basis may be up to 130% of

then box 6a or 6d must be checked regardless of whether the

such basis determined without this provision.

taxpayer has informed the housing credit agency that the

For existing buildings, the rehabilitation expenditures

taxpayer intends to make the election under section 42(i)(2)

under section 42(e) may be up to 130% of the expenditures

(B) to reduce eligible basis by the proceeds of any

determined without regard to this provision.

tax-exempt obligation.

Enter the percentage to which eligible basis was

Part II—First-Year Certification

increased. For example, if the eligible basis was increased to

120%, enter “120.”

Section 42(d)(5)(B)(v) permits a similar increase in basis

Completed by Building Owner With Respect to

for any non-federally subsidized building designated by the

the First Year of the Credit Period

state agency to need the basis increase to be financially

feasible as part of a qualified low-income housing project.

By completing Part II, you are certifying the date the

building is placed in service corresponds to the date

See section 42(d)(5)(B) for definitions of a qualified

on line 5. If the Form 8609 issued to you contains

census tract and a difficult development area, and

CAUTION

TIP

the wrong date or no date, obtain a new or amended Form

for other details.

8609 from the housing credit agency.

Gulf Opportunity (GO) Zone, Rita GO Zone, and Wilma

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

GO Zone. The housing credit agency may increase the

Eligible basis does not include the cost of land. Determine

eligible basis of buildings in these specific zones if the

eligible basis at the close of the first year of the credit period

buildings were placed in service during the period beginning

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

on January 1, 2006, and ending on December 31, 2010. For

determining the start of the credit period).

more information, see section 1400N(c)(3).

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Instructions for Form 8609 (1-2016)

Instructions For Form 8609 - 2016 Page 3

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