Form 8609-A Instructions for Low-Income Housing Credit

Form 8609-A, the “Annual Statement for Low-Income Housing Credit,” is a document for the Low-Income Housing Tax Credit (LIHTC) program. Building owners do not complete this form; instead, it is issued annually by the state Housing Finance Agency (HFA) that allocated the tax credits. The form’s function is to provide the owner with the specific figures needed to claim the tax credit for that year.

This document is distinct from Form 8609, the “Low-Income Housing Credit Allocation and Certification.” Form 8609 is used only once at the beginning of the credit period to certify a project’s initial qualification and establish the building’s eligible basis. After the first year, the HFA issues Form 8609-A annually to provide the credit details for the specific tax year.

Understanding the Information on Form 8609-A

Part I of Form 8609-A contains identifying information for the building and its owner, including the owner’s name, address, and Taxpayer Identification Number (TIN). This section also includes the Building Identification Number (BIN). The HFA assigns a unique BIN to each building in a project, and this number is used for tracking with the IRS throughout the 15-year compliance period.

The core of the form is Part II, the Annual Statement, which details the information needed to calculate the tax credit. It lists the date the building was placed in service, which is a primary date for depreciation and credit calculations. This section also specifies if the building is new construction, a rehabilitated existing building, or federally subsidized. A federally subsidized building generally receives a lower credit percentage.

A figure presented in Part II is the applicable percentage, which is the rate used to calculate the annual credit. For new buildings that are not federally subsidized, the rate is a fixed 9%, while a 4% rate applies to existing or federally subsidized buildings. The applicable percentage is locked in based on when the building was placed in service or when the credit allocation was made.

Part II also provides the qualified basis of the building for the tax year. The qualified basis is the portion of the building’s total cost attributable to low-income units. It is calculated by multiplying the building’s eligible basis by the “applicable fraction,” which is the lesser of the percentage of low-income units or the percentage of total floor space occupied by those units.

If the “First year of credit period” box is checked, it signifies the initial year the owner is claiming the credit. In this first year, the credit amount is often adjusted based on the number of months the building was in service. This proration ensures the owner claims credit only for the portion of the year the property was available as a qualified low-income building.

Using Form 8609-A to Claim the Low-Income Housing Credit

The information on Form 8609-A is used to complete and file Form 8586, “Low-Income Housing Credit,” which is attached to the owner’s annual tax return. The owner takes the qualified basis from Part II of Form 8609-A and enters it onto the corresponding line on Form 8586. Each building in a project will have its own Form 8609-A and will be listed separately on Form 8586.

The applicable percentage from Form 8609-A is then used on Form 8586 to compute the credit by multiplying it against the qualified basis. If the owner acquired or disposed of the building during the year, the credit may need to be prorated based on the number of months of ownership.

Once Form 8586 is completed, it is filed with the owner’s federal income tax return, such as Form 1040 for individuals, Form 1120 for corporations, or Form 1065 for partnerships. A copy of Form 8609-A for each building must be attached to the tax return along with Form 8586.

Annual Compliance and Record-Keeping Obligations

Claiming the tax credit carries long-term responsibilities. The LIHTC program operates on a 15-year compliance period, and owners must maintain records throughout this term. All copies of Form 8609-A, the initial Form 8609, and supporting documentation for the qualified basis must be retained for at least three years after the 15-year period ends.

Each year, the owner must certify to the state HFA that the project continues to meet LIHTC requirements. This includes verifying the property meets the minimum set-aside test (e.g., at least 20% of units rented to tenants at or below 50% of area median income, or 40% of units at or below 60% of area median income), that rents are restricted, and that the housing remains suitable for occupancy. Failure to provide this annual certification can jeopardize the credit.

An aspect of ongoing compliance is the potential for credit recapture. If a building fails to meet LIHTC requirements during the 15-year compliance period, a portion of the credits claimed in previous years may be recaptured. Common triggers for recapture include a decrease in the qualified basis or the disposition of the building. The recapture amount is calculated on Form 8611, “Recapture of Low-Income Housing Credit,” which is filed with the tax return for the year of noncompliance.

Handling Corrections and Amendments to Form 8609-A

If an owner discovers an error on Form 8609-A, they cannot alter the document directly. The form is an official statement from the state HFA, and only the issuing agency can make corrections. Any unauthorized changes made by the taxpayer would invalidate the form.

The owner must contact the HFA that issued the form and explain the nature of the error, such as a mistake in the qualified basis or applicable percentage. The HFA will review the information and, if an error is confirmed, issue a corrected Form 8609-A.

If the original tax return was filed using incorrect information, an amended return will likely be necessary. For example, an individual owner would file Form 1040-X, “Amended U.S. Individual Income Tax Return.” The corrected Form 8609-A and a new Form 8586 with the accurate credit amount must be attached to the amended return.