Form 8611 Recapture of Low-Income Housing Credit

Form

8611

Recapture of Low-Income Housing Credit
©

(Rev. January 2009)
Department of the Treasury
Internal Revenue Service

Note: Complete a separate Form 8611 for each building to
which recapture applies.

A Name(s) shown on return

C Address of building (as shown on Form 8609)

F

OMB No. 1545-1035

Attach to your return.

D Building identification
number (BIN)

If building is financed in whole or part with tax-exempt bonds, see instructions and furnish:

Attachment
Sequence No.

90

B

Identifying number

E

Date placed in service (from
Form 8609)

(2) Date of issue

(1) Issuer’s name

(3) Name of issue

(4) CUSIP number

Note: Skip lines 1–7 and go to line 8 if recapture is passed through from a flow-through entity (partnership, S corporation, estate,
or trust).
1

Enter total credits reported on Form 8586 in prior years for this building

1

2

Credits included on line 1 attributable to additions to qualified basis (see instructions)

2

3

Credits subject to recapture. Subtract line 2 from line 1

3

4

Credit recapture percentage (see instructions)

4

5
6

Accelerated portion of credit. Multiply line 3 by line 4
Percentage decrease in qualified basis. Express as a decimal amount carried out to at least 3 places
(see instructions)

5

7

7

8

Enter recapture amount from flow-through entity (see Note above)

8

9

Enter the unused portion of the accelerated amount from line 7 (see instructions)

9

10

Net recapture. Subtract line 9 from line 7 or line 8. If less than zero, enter -0-

10

11

Enter interest on the line 10 recapture amount (see instructions)

11

12
13

Total amount subject to recapture. Add lines 10 and 11
Unused credits attributable to this building reduced by the accelerated portion included on
line 9 (see instructions)

12

15

Recapture tax. Subtract line 13 from line 12. If zero or less, enter -0-. Enter the result here
and on the appropriate line of your tax return (see instructions). If more than one
Form 8611 is filed, add the line 14 amounts from all forms and enter the total on the appropriate
line of your return. Electing large partnerships, see instructions
Carryforward of the low-income housing credit attributable to this building. Subtract
line 12 from line 13. If zero or less, enter -0- (see instructions)

.

6

Amount of accelerated portion recaptured (see instructions if prior recapture on building).
Multiply line 5 by line 6. Section 42(j)(5) partnerships, go to line 16. All other flow-through
entities (except electing large partnerships), enter the result here and enter each recipient’s
share in the appropriate box of Schedule K-1. Generally, flow-through entities other than
electing large partnerships will stop here. (Note: An estate or trust enters on line 8
only its share of recapture amount attributable to the credit amount reported on its
Form 8586.)

14

.

13

14
15

Only Section 42(j)(5) partnerships need to complete lines 16 and 17.
16

Enter interest on the line 7 recapture amount (see instructions)

16

17

Total recapture. Add lines 7 and 16 (see instructions)

17

For Paperwork Reduction Act Notice, see instructions.

Cat. No. 63983Q

Form

8611

(Rev. 1-2009)

Form 8611 (Rev. 1-2009)

General Instructions
Section references are to the Internal
Revenue Code.

Purpose of Form
Use this form if you must recapture part
of the low-income housing credit you
claimed in previous years because the
qualified basis decreased from one year
to the next or you disposed of a
building, or your interest therein, and
you did not follow the procedures that
would have prevented recapture of the
credit.
Decrease in qualified basis. The
decrease may result from a change in
the eligible basis, or the building no
longer meets the minimum set aside
requirements of section 42(g)(1), the
gross rent requirements of section
42(g)(2), or the other requirements for
the units which are set aside.
Building dispositions. The disposition
of a building, or an interest therein, will
generate the recapture of the credit. You
can prevent the recapture if you follow
the procedures below, relative to the
date of the disposition of the building or
the interest therein.
Building dispositions before July 31,
2008. Disposing of a building or an
interest therein during the tax year will
generate a credit recapture, unless you
timely post a satisfactory bond or pledge
eligible U.S. Treasury securities as
collateral. For details on the rules for
posting or pledging, see Rev. Rul. 90-60,
1990-2 C.B. 3, and Rev. Proc. 99-11,
1999-1 C.B. 275.
Note. You may discontinue maintaining
a bond or pledging eligible U.S. Treasury
securities by making the election
described in Rev. Proc. 2008-60,
2008-43 I.R.B. 1006, and if it is
reasonably expected that the building
will continue to be operated as a
qualified low-income building for the
remainder of the building’s compliance
period. See Rev. Proc. 2008-60 for the
details on making the election.

Page

Building dispositions after July 30,
2008. Disposing of a building or an
interest therein will generate a credit
recapture, unless it is reasonably
expected that the building will continue
to be operated as a qualified low-income
building for the remainder of the
building’s compliance period.
See section 42(j) for more information.
Note. If the decrease in qualified basis is
because of a change in the amount for
which you are financially at risk on the
building, then you must first recalculate
the amount of credit taken in prior years
under section 42(k) before you calculate
the recapture amount on this form.
To complete this form you will need
copies of the following forms that you
have filed:
● Form 8586, Low-Income Housing
Credit (and Form 3800, General Business
Credit, if applicable);
● Form 8609, Low-Income Housing
Credit Allocation and Certification (or
predecessor, Form 8609, Low-Income
Housing Credit Allocation Certification);
● Form 8609-A, Annual Statement for
Low-Income Housing Credit (or
predecessor, Schedule A (Form 8609),
Annual Statement); and
● Form 8611.
Note. Flow-through entities must give
partners, shareholders, and beneficiaries
the information that is reported in items
C, D, E, and F of Form 8611.
Recapture does not apply if:
● You disposed of the building or an
ownership interest in it and you satisfy
the requirements for avoiding recapture
as outlined earlier under Building
dispositions;
● You disposed of not more than 331⁄ 3 %
in the aggregate of your ownership
interest in a building that you held
through a partnership, or you disposed
of an ownership interest in a building
that you held through a partnership to
which section 42(j)(5) applies or through
an electing large partnership;

2

● The decrease in qualified basis does
not exceed the additions to qualified
basis for which credits were allowable in
years after the year the building was
placed in service;
● You correct a noncompliance event
within a reasonable period after it is
discovered or should have been
discovered;
● The qualified basis is reduced
because of a casualty loss, provided the
property is restored or replaced within a
reasonable period.

Recordkeeping
In order to verify changes in qualified
basis from year to year, keep a copy of
all Forms 8586, 8609, 8609-A (or
predecessor, Schedule A (Form 8609)),
8611, and 8693 for 3 years after the
15-year compliance period ends.

Specific Instructions
Note. If recapture is passed through
from a flow-through entity (partnership,
S corporation, estate, or trust), skip lines
1–7 and go to line 8.
Item F. If the building is financed with
tax-exempt bonds, furnish the following
information: (1) name of the entity that
issued the bond (not the name of the
entity receiving the benefit of the
financing); (2) date of issue, generally the
first date there is a physical exchange of
the bonds for the purchase price;
(3) name of the issue, or if not named,
other identification of the issue; and
(4) CUSIP number of the bond with the
latest maturity date. If the issue does not
have a CUSIP number, enter “None.”
Line 1. Enter the total credits claimed on
the building for all prior years from all
Forms 8586 (before reduction due to the
tax liability limit) you have filed. Prior to
the December 2006 revision of Form
8586, the credits (before reduction due
to the tax liability limit) were reported in
Part I. Do not include credits taken by a
previous owner.

Line 2 Worksheet (*Line reference is to Form 8609-A (or predecessor, Schedule A (Form 8609).)
a
b
c
d

Enter the amount from line 10*
Multiply a by 2
Enter the amount from line 11*
Subtract c from b

e Enter decimal amount figured in step 1 of the instructions for line 14*. If line 14* does not apply to you,
enter -0f Multiply d by e
g Subtract f from d
h Divide line 16* by line 15*. Enter the result here
i Multiply g by h. Enter this amount on line 2. (If more than one worksheet is completed, add the amounts
on i from all worksheets and enter the total on line 2.)

a
b
c
d
e
f
g
h
i

Form 8611 (Rev. 1-2009)

Page

Line 2. Determine the amount to enter
on this line by completing a separate
Line 2 Worksheet (on page 2) for each
prior year for which line 7 of Form
8609-A (or predecessor, Schedule A
(Form 8609)) was completed.
Line 4. Enter the credit recapture
percentage, expressed as a decimal
carried to at least 3 places, from the
table below:

Line 7. If there was a prior recapture of
accelerated credits on the building, do
not recapture that amount again as the
result of the current reduction in
qualified basis. The example below
demonstrates how to incorporate into
the current (Year 4) recapture the first
year (Year 1) accelerated portion as a
result of a prior year (Year 2) recapture
event.

IF the recapture
event occurs
in . . .

Line 9. Compute the unused portion of
the accelerated amount on line 7 by:
Step 1. Totaling the credits
attributable to the building that you
could not use in prior years.*
Step 2. Reducing the result of step 1
by any unused credits attributable to
additions to qualified basis.
Step 3. Multiplying the result of step 2
by the decimal amount on line 4.
Step 4. Multiplying the result of step 3
by the decimal amount on line 6.
Step 5. Enter the result of step 4 on
line 9.
*Generally, this is the amount of credit reported on

THEN
enter on
line 4 . . .

Years 2 through 11

.333

Year 12

.267

Year 13

.200

Year 14

.133

Year 15

.067

Line 6. Enter the percentage decrease in
qualified basis during the current year.
For this purpose, figure qualified basis
without regard to any additions to
qualified basis after the first year of the
credit period. Compare any decrease in
qualified basis first to additions to
qualified basis. Recapture applies only if
the decrease in qualified basis exceeds
additions to qualified basis after the first
year of the credit period.
If you disposed of the building or an
ownership interest in it and did not
satisfy the requirements for avoiding
recapture as outlined earlier under
Building dispositions, you must
recapture all of the accelerated portion
shown on line 5. Enter 1.000 on line 6.
Note. If the decrease causes the
qualified basis to fall below the minimum
set-aside requirements of section
42(g)(1) (the 20-50 test or the 40-60
test), then 100% of the amount shown
on line 5 must be recaptured. Enter
1.000 on line 6. If you elected the 40-60
test for this building and the decrease
causes you to fall below 40%, you
cannot switch to the 20-50 test to meet
the set-aside requirements. You must
recapture the entire amount shown on
line 5.

line 1 of this Form 8611 reduced by the total
low-income housing credits allowed on Form 8586
or Form 3800 for each year.

Special rule for electing large
partnerships. Enter zero on line 9. An
electing large partnership is treated as
having fully used all prior year credits.
Line 11. Compute the interest separately
for each prior tax year for which a credit
is being recaptured. Interest must be
computed at the overpayment rate
determined under section 6621(a)(1) and
compounded on a daily basis from the
due date (not including extensions) of
the return for the prior year until the
earlier of (a) the due date (not including
extensions) of the return for the
recapture year, or (b) the date the return
for the recapture year is filed and any
income tax due for that year has been
fully paid.
Tables of interest factors to compute
daily compound interest were published
in Rev. Proc. 95-17, 1995-1 C.B. 556.
The interest rate in effect through March
31, 2009, is shown in Rev. Rul. 2008-54,
2008-52 I.R.B. 1352. For periods after

March 31, 2009, use the overpayment
rate under section 6621(a)(1) in the
revenue rulings published quarterly in
the Internal Revenue Bulletin.
Note. If the line 8 recapture amount is
from a section 42(j)(5) partnership, the
partnership will figure the interest and
include it in the recapture amount
reported to you. Enter “-0-” on line 11
and write “Section 42(j)(5)” to the left of
the entry space for line 11.
Line 13. Subtract the amount on line 9
from the total of all prior year unused
credits attributable to the building (Step
1 of the line 9 instruction above). Enter
the result on line 13.
Line 14.
For information
on how to report
the recapture tax See the instructions
on...
for the...
Form 1040

“Total tax” line in the
Instructions for Form
1040

Form 1120

“Other taxes” line in
the Instructions for
Form 1120

Special rule for electing large
partnerships. Subtract the credit shown
on Form 8586 from the total of the line
14 amounts from all Forms 8611. Enter
the result (but not less than zero) on
Form 1065-B, Part I, line 26.
Note. You must also reduce the current
year low-income housing credit, before
entering it on Schedules K and K-1, by
the amount of the reduction to the total
of the recapture amounts.
Line 15. Carry forward the low-income
housing credit attributable to this
building to the next tax year. Report any
carryforward attributable to buildings
placed in service before 2008 on the
carryforward line of Form 3800 for the
next tax year. Report any carryforward
attributable to buildings placed in service
after 2007 on the carryforward line of
Form 8586 for the next tax year. See the

Line 7—Example. $2,700 of accelerated portion of low-income housing credit spread over a 10-year period and not falling
below the minimum set-asides for the building. Also, there was a 20% reduction in qualified basis in Year 2 and 30% in Year 4.
Year 1
Low-income housing
credit
Recapture of Year 1
low-income housing
credit

$270

Year 2
$216 ($270 × .8 (20%
reduction in qualified
basis))
$18 ($270 × .333 × .2
(20% reduction in
qualified basis))

3

Year 3
$270

Year 4*
$189 ($270 × .7 (30%
reduction in qualified
basis))
$9 ($27 ($270 × .333 ×
.3 (30% reduction in
qualified basis) minus
$18 Year 2 recapture))

* You will have to complete the rest of the form to figure the recapture as the result of the current year reduction in basis as it affects the Year 2 and Year 3 credit.

Form 8611 (Rev. 1-2009)

instructions for Forms 8586 and 3800 for
details on how to report the carryforward
of unused credits.
Lines 16 and 17. Only section 42(j)(5)
partnerships complete these lines. This
is a partnership (other than an electing
large partnership) that has at least 35
partners, unless the partnership elects
(or has previously elected) not to be
treated as a section 42(j)(5) partnership.
For purposes of this definition, a
husband and wife are treated as one
partner.
For purposes of determining the credit
recapture amount, a section 42(j)(5)
partnership is treated as the taxpayer to
which the low-income housing credit
was allowed and as if the amount of
credit allowed was the entire amount
allowable under section 42(a).
See the instructions for line 11 to
figure the interest on line 16. The
partnership must attach Form 8611 to its
Form 1065 and allocate this amount to

Page

each partner on Schedule K-1 (Form
1065) in the same manner as the
partnership’s taxable income is allocated
to each partner.
Paperwork Reduction Act Notice. We
ask for the information on this form to
carry out the Internal Revenue laws of
the United States. You are required to
give us the information. We need it to
ensure that you are complying with
these laws and to allow us to figure and
collect the right amount of tax.
You are not required to provide the
information requested on a form that is
subject to the Paperwork Reduction Act
unless the form displays a valid OMB
control number. Books or records
relating to a form or its instructions must
be retained as long as their contents
may become material in the
administration of any Internal Revenue
law. Generally, tax returns and return
information are confidential, as required
by section 6103.

4

The time needed to complete and file
this form will vary depending on
individual circumstances. The estimated
burden for individual taxpayers filing this
form is approved under OMB control
number 1545-0074 and is included in
the estimates shown in the instructions
for their individual income tax return. The
estimated burden for all other taxpayers
who file this form is shown below.
Recordkeeping
8 hr., 21 min.
Learning about the
law or the form
1 hr.
Preparing and sending
the form to the IRS
1 hr., 10 min.
If you have comments concerning the
accuracy of these time estimates or
suggestions for making this form
simpler, we would be happy to hear
from you. You can write to the IRS at
the address listed in the instructions for
the tax return with which this form is
filed.