Form 8609, Low-Income Housing Credit Allocation and Certification

Instructions for Form 8609

Department of the Treasury
Internal Revenue Service

(Rev. December 2010)

Low-Income Housing Credit Allocation and Certification
(For use with Form 8609 (Rev. December 2008))
Section references are to the Internal
Revenue Code unless otherwise noted.

What’s New
For allocations of credit initially made in
2006, 2007, or 2008 in the Gulf Opportunity
(GO) Zone, Rita GO Zone, or Wilma GO
Zone, the ending date for the period during
which the building must be placed in service
has been extended to December 31, 2011.
See item 3 under Allocation of credit for
details.
The address used to file this form has
changed. See Where to file Form 8609
below for the new address.

General Instructions
Purpose of Form
Owners of residential low-income rental
buildings are allowed a low-income housing
credit for each qualified building over a
10-year credit period. Form 8609 can be
used to obtain a housing credit allocation
from the housing credit agency. A separate
Form 8609 must be issued for each building
in a multiple building project. Form 8609 is
also used to certify certain information.
Housing credit agency. This is any state
or local agency authorized to make
low-income housing credit allocations within
its jurisdiction.
Building identification number (BIN).
This number is assigned by the housing
credit agency. The BIN initially assigned to a
building must be used for any allocation of
credit to the building that requires a
separate Form 8609 (see Multiple Forms
8609, later). For example, rehabilitation
expenditures treated as a separate new
building should not have a separate BIN if
the building already has one. Use the
number first assigned to the building.
Allocation of credit. For an owner to claim
a low-income housing credit on a building
(except as explained under Tax-exempt
bonds, later), the housing credit agency
must make an allocation of the credit by the
close of the calendar year in which the
building is placed in service, unless:
1. The allocation is the result of an
advance binding commitment by the credit
agency made not later than the close of the
calendar year in which the building is placed
in service (see section 42(h)(1)(C));
2. The allocation relates to an increase
in qualified basis (see section 42(h)(1)(D));
3. The allocation is made to a building
located in the Gulf Opportunity (GO) Zone,
Rita GO Zone, or Wilma GO Zone, if the
allocation was initially made in 2006, 2007,
or 2008, and the building is placed in service
during the period beginning on January 1,
2006, and ending on December 31, 2011

(see Pub. 4492, Information for Taxpayers
Affected by Hurricanes Katrina, Rita, and
Wilma, for a list of the counties and parishes
in these specific zones);
4. The allocation is made for a building
placed in service no later than the second
calendar year following the calendar year in
which the allocation is made if the building is
part of a project in which the taxpayer’s
basis is more than 10% of the project’s
reasonably expected basis as of the end of
that second calendar year; or
5. The allocation is made for a project
that includes more than one building if:
a. The allocation is made during the
project period,
b. The allocation applies only to
buildings placed in service during or after
the calendar year in which the allocation is
made, and
c. The part of the allocation that applies
to any building is specified by the end of the
calendar year in which the building is placed
in service.

the form. Submit a copy with Form 8610,
Annual Low-Income Housing Credit
Agencies Report, and keep a copy for the
records. The agency must send the original,
signed Form 8609 (including instructions) to
the building owner.

See sections 42(h)(1)(E) and 42(h)(1)(F)
and Regulations section 1.42-6 for more
details.
The agency can only make an allocation
to a building located within its geographical
jurisdiction. Once an allocation is made, the
credit is allowable for all years during the
10-year credit period. A separate Form 8609
must be completed for each building to
which an allocation of credit is made.
Multiple Forms 8609. Allocations of credit
in separate calendar years require separate
Forms 8609. Also, when a building receives
separate allocations for acquisition of an
existing building and for rehabilitation
expenditures, a separate Form 8609 must
be completed for each credit allocation.
Tax-exempt bonds. No housing credit
allocation is required for any portion of the
eligible basis of a qualified low-income
building that is financed with tax-exempt
bonds taken into account for purposes of the
volume cap under section 146. An allocation
is not needed when 50% or more of the
aggregate basis of the building and the land
on which the building is located (defined
below) is financed with certain tax-exempt
bonds. However, the owner still must get a
Form 8609 from the appropriate housing
credit agency (with the applicable items
completed, including an assigned BIN).
Land on which the building is located.
This includes only land that is functionally
related and subordinate to the qualified
low-income building (see Regulations
sections 1.103-8(a)(3) and 1.103-8(b)(4)(iii)
for the meaning of “functionally related and
subordinate”).

Note. The housing credit agency may
require you to submit a copy of Form 8609
with a completed Part II to the agency. You
should contact the agency to obtain agency
filing requirements.

Filing Requirement
Housing credit agency. Complete and
sign Part I of Form 8609 and make copies of
Cat. No. 52385A

Building owner. You must make a
one-time submission of Form 8609 to the
Low-Income Housing Credit (LIHC) Unit at
the IRS Philadelphia campus. After making
a copy of the completed original Form 8609,
file the original of the form with the unit no
later than the due date (including
extensions) of your first tax return with which
you are filing Form 8609-A, Annual
Statement for Low-Income Housing Credit.
Where to file Form 8609. Send the
properly completed and signed form(s) to:
Department of the Treasury
Internal Revenue Service Center
Philadelphia, PA 19255-0549

Also, file Form 8609-A for each year of
the 15-year compliance period. The credit is
claimed on Form 8586, Low-Income
Housing Credit. See the forms for filing
instructions.

Building Owner’s
Recordkeeping
Keep the following items in your records for
three years after the due date (including
extensions) of the owner’s tax return for the
tax year that includes the end of the 15-year
compliance period.
• A copy of the original Form 8609 received
from the housing agency and all related
Forms 8609-A (or predecessor Schedules A
(Form 8609)), Forms 8586, and any Forms
8611, Recapture of Low-Income Housing
Credit.
• If the maximum applicable credit
percentage allowable on line 2 reflects an
election under section 42(b)(1)[(A)](ii), (or
former section 42(b)(2)(A)(ii), for buildings
placed in service before July 31, 2008), a
copy of the election statement.
• If the binding agreement specifying the
housing credit dollar amount is contained in
a separate document, a copy of the binding
agreement.
• If the housing credit dollar amount
allocated on line 1b reflects an allocation
made under section 42(h)(1)(E) or section
42(h)(1)(F), a copy of the allocation
document.

Specific Instructions
Part I—Allocation of Credit
Completed by Housing Credit
Agency Only
Addition to qualified basis. Check this
box if an allocation relates to an increase in
qualified basis under section 42(f)(3). Enter
only the housing credit dollar amount for the
increase. Do not include any portion of the
original qualified basis when determining
this amount.
Amended form. Check this box if this form
amends a previously issued form. Complete
all entries and explain the reason for the
amended form. For example, if there is a
change in the amount of initial allocation
before the close of the calendar year, file an
amended Form 8609 instead of the original
form.
Item A. Identify the building for which this
Form 8609 is issued when there are multiple
buildings with the same address (e.g.,
BLDG. 6 of 8).
Line 1a. Generally, where Form 8609 is
the allocating document, the date of the
allocation is the date the Form 8609 is
completed, signed, and dated by an
authorized official of the housing credit
agency during the year the building is
placed in service.
However, if an allocation is made under
section 42(h)(1)(E) or 42(h)(1)(F), the date
of allocation is the date the authorized
official of the housing credit agency
completes, signs, and dates the section
42(h)(1)(E) or 42(h)(1)(F) document used to
make the allocation. If no allocation is
required (i.e., 50% or greater tax-exempt
bond financed building), leave line 1a blank.
Line 1b. Enter the housing credit dollar
amount allocated to the building for each
year of the 10-year credit period. The
amount should equal the percentage on line
2 multiplied by the amount on line 3a. The
housing credit agency is required to allocate
only the amount necessary to assure project
feasibility. To accomplish this, the agency
can, to the extent permitted by the code and
regulations, lower the percentage on line 2
and the amount on line 3a. See the
instructions for these lines for the limits that
apply. For tax-exempt bond projects for
which no allocation is required, enter the
housing credit dollar amount allowable
under section 42(h)(4).
Line 2. The maximum applicable credit
percentage allowable is determined in part
by the date the building was placed in
service. Follow the instructions pertaining to
the date the building was placed in service.
Buildings placed in service before
July 31, 2008. Enter the maximum
applicable credit percentage allowable to the
building for the month the building was
placed in service or, if applicable, for the
month determined under former section
42(b)(2)(A)(ii). This percentage may be less
than the applicable percentage published by
the IRS.
If an election was made under former
section 42(b)(2)(A)(ii) to use the applicable
percentage for a month other than the
month in which a building is placed in

service, the requirements of Regulations
section 1.42-8 must be met. The agency
must keep a copy of the binding agreement.
The applicable percentage is published
monthly in the Internal Revenue Bulletin. For
new buildings that are not federally
subsidized under section 42(i)(2)(A), use the
applicable percentage for the 70% present
value credit. For new buildings that are
federally subsidized, or existing buildings,
use the applicable percentage for the 30%
present value credit. See the instructions for
line 6 for the definition of “federally
subsidized,” and the time period for which
the definition applies. A taxpayer may elect
under section 42(i)(2)(B) to reduce eligible
basis by the principal amount of any
outstanding below-market federal loan or
the proceeds of any tax-exempt obligation in
order to obtain the higher credit percentage.
For allocations to buildings for additions
to qualified basis under section 42(f)(3), do
not reduce the applicable percentage even
though the building owner may only claim a
credit based on two-thirds of the credit
percentage allocated to the building.
Buildings placed in service after July
30, 2008. Enter the maximum applicable
credit percentage allowable to the building
for the month the building was placed in
service or, if applicable, for the month
determined under section 42(b)(1)[(A)](ii).
This percentage may be less than the
applicable percentage published by the IRS.

not reduce the applicable percentage even
though the building owner may only claim a
credit based on two-thirds of the credit
percentage allocated to the building.

A minimum applicable credit
percentage of 9% is in effect for new
non-federally subsidized buildings
placed in service after July 30, 2008, but
before December 31, 2013. The 9%
minimum also applies to new non-federally
subsidized buildings even if the taxpayer
made an irrevocable election (under former
section 42(b)(2)(A)(ii)) on or before July 30,
2008. If this circumstance applies, do not
enter less than 9% on line 2, unless the
housing credit agency determines that a
lesser amount is necessary to assure
project feasibility. See section 42(m),
Regulations section 1.42-8(a)(4), and Notice
2008-106, 2008-49 I.R.B. 1239.
If an election was made under section
42(b)(1)[(A)](ii) to use the applicable
percentage for a month other than the
month in which a building is placed in
service, the requirements of Regulations
section 1.42-8 must be met. The agency
must keep a copy of the binding agreement.
The applicable percentage is published
monthly in the Internal Revenue Bulletin. For
new buildings that are not federally
subsidized under section 42(i)(2)(A), use the
applicable percentage for the 70% present
value credit, but do not enter less than 9%,
unless the housing credit agency
determines that a lesser amount is
necessary to assure project feasibility. For
new buildings that are federally subsidized,
or existing buildings, use the applicable
percentage for the 30% present value credit.
See the instructions for line 6 for the
definition of “federally subsidized,” and the
time period for which the definition applies.
A taxpayer may elect under section
42(i)(2)(B) to reduce eligible basis by the
proceeds of any tax-exempt obligation in
order to obtain the higher credit percentage.
For allocations to buildings for additions
to qualified basis under section 42(f)(3), do

Except as explained in the instructions
for line 3b below, the eligible basis for a new
building is its adjusted basis as of the close
of the first tax year of the credit period. For
an existing building, the eligible basis is its
acquisition cost plus capital improvements
through the close of the first tax year of the
credit period. See the instructions for line 3b
and section 42(d) for other exceptions and
details.

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CAUTION

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Line 3a. Enter the maximum qualified basis
of the building. In computing qualified basis,
the housing credit agency should use only
the amount of eligible basis necessary to
result in a qualified basis which, when
multiplied by the percentage on line 2,
equals the credit amount on line 1b.
However, the housing credit agency is not
required to reduce maximum qualified basis
and can lower the maximum applicable
percentage on line 2. To figure this, multiply
the eligible basis of the qualified low-income
building by the smaller of:
• The fractional amount of low-income units
to all residential rental units (the “unit
fraction”) or
• The fractional amount of floor space of
the low-income units to the floor space of all
residential rental units (the “floor space
fraction”).
Generally, a unit is not treated as a
low-income unit unless it is suitable for
occupancy, used other than on a transient
basis, and occupied by qualifying tenants.
Section 42(i)(3) provides for certain
exceptions (e.g., units that provide for
transitional housing for the homeless may
qualify as low-income units). See sections
42(i)(3) and 42(c)(1)(E) for more
information.

Line 3b. Special rule to increase basis for
buildings in certain high-cost areas. If
the building is located in a high-cost area
(i.e.,“qualified census tract,” “difficult
development area,” Gulf Opportunity (GO)
Zone, Rita GO Zone, or Wilma GO Zone),
the eligible basis may be increased as
follows.
• For new buildings, the eligible basis may
be up to 130% of such basis determined
without this provision.
• For existing buildings, the rehabilitation
expenditures under section 42(e) may be up
to 130% of the expenditures determined
without regard to this provision.
Enter the percentage to which eligible
basis was increased. For example, if the
eligible basis was increased to 120%, enter
“120.”
Buildings placed in service after July
30, 2008. For these buildings, the
definition of a “difficult development area”
has been expanded to include any building
designated by the state credit agency in
order to be financially feasible as part of a
qualified low-income housing project.
See section 42(d)(5)(B) (former
section 42(d)(5)(C) for buildings
placed in service before July 31,
2008) for definitions of a qualified census
tract and a difficult development area, and
for other details.
TIP

Gulf Opportunity (GO) Zone, Rita GO
Zone, and Wilma GO Zone. The housing
credit agency may increase the eligible
basis of buildings in these specific zones if
the buildings were placed in service during
the period beginning on January 1, 2006,
and ending on December 31, 2011. For
more information, see section 1400N(c)(3).
Note. Before increasing eligible basis, the
eligible basis must be reduced by any
federal subsidy which the taxpayer elects to
exclude from eligible basis. For buildings
placed in service before July 31, 2008, the
eligible basis must also be reduced by any
federal grant received. For buildings placed
in service after July 30, 2008, the eligible
basis cannot include any costs financed with
federal grant proceeds.
Line 4. Enter the percentage of the
aggregate basis of the building and land on
which the building is located that is financed
by certain tax-exempt bonds. If this amount
is zero, enter -0-. Do not leave this line
blank.
Line 5. The placed-in-service date for a
residential rental building is the date the first
unit in the building is ready and available for
occupancy under state or local law.
Rehabilitation expenditures treated as a
separate new building under section 42(e)
are placed in service at the close of any
24-month period over which the
expenditures are aggregated, whether or not
the building is occupied during the
rehabilitation period.
Note. The placed-in-service date for an
existing building is determined separately
from the placed-in-service date of
rehabilitation expenditures treated as a
separate new building.
Line 6. Not more than 90% of the state
housing credit ceiling for any calendar year
can be allocated to projects other than
projects involving qualified nonprofit
organizations. A qualified nonprofit
organization must own an interest in the
project (directly or through a partnership)
and materially participate (within the
meaning of section 469(h)) in the
development and operation of the project
throughout the compliance period. See
section 42(h)(5) for more details.
Generally, no credit is allowable for
acquisition of an existing building unless
substantial rehabilitation is done. See
sections 42(d)(2)(B)(iv) and 42(f)(5) that
were in effect on the date the allocation was
made. Do not issue Form 8609 for
acquisition of an existing building unless
substantial rehabilitation under section 42(e)
is placed in service.
Lines 6a and 6d for buildings placed
in service before July 31, 2008.
Generally, a building is treated as federally
subsidized if at any time during the tax year
or any prior tax year there is outstanding
any tax-exempt bond financing or any
below-market federal loan, the proceeds of
which are used (directly or indirectly) for the
building or its operation. If a building is
federally subsidized, then box 6a or 6d must
be checked regardless of whether the
taxpayer has informed the housing credit
agency that the taxpayer intends to make
the election under section 42(i)(2)(B) to
reduce eligible basis by the principal amount
of any outstanding below-market federal

loan or the proceeds of any tax-exempt
obligation.
Lines 6a and 6d for buildings placed
in service after July 30, 2008. A building
is treated as federally subsidized if at any
time during the tax year or prior tax year
there is outstanding any tax-exempt bond
financing, the proceeds of which are used
(directly or indirectly) for the building or its
operation. If a building is federally
subsidized, then box 6a or 6d must be
checked regardless of whether the taxpayer
has informed the housing credit agency that
the taxpayer intends to make the election
under section 42(i)(2)(B) to reduce eligible
basis by the proceeds of any tax exempt
obligation.
Line 6f for buildings placed in service
before July 31, 2008. Under section
42(i)(2)(E), buildings receiving assistance
under the HOME Investment Partnerships
Act (as in effect on August 10, 1993) or the
Native American Housing Assistance and
Self-Determination Act of 1996 (as in effect
on October 1, 1997) are not treated as
federally subsidized if 40% or more of the
residential units in the building are occupied
by individuals whose income is 50% or less
of the area median gross income (or
national nonmetropolitan median gross
income, when applicable). Buildings located
in New York City receiving this assistance
are not treated as federally subsidized if
25% or more of the residential units in the
building are occupied by individuals whose
income is 50% or less of the area median
gross income.

Part II—First-Year
Certification
Completed by Building Owner With
Respect to the First Year of the
Credit Period
By completing Part II, you are
certifying the date the building is
CAUTION
placed in service corresponds to the
date on line 5. If the Form 8609 issued to
you contains the wrong date or no date,
obtain a new or amended Form 8609 from
the housing credit agency.
Line 7. Enter the eligible basis (in dollars)
of the building. Eligible basis does not
include the cost of land. Determine eligible
basis at the close of the first year of the
credit period (see sections 42(f)(1), 42(f)(5),
and 42(g)(3)(B)(iii) for determining the start
of the credit period).
For new buildings, the eligible basis is
generally the cost of construction or
rehabilitation expenditures incurred under
section 42(e).
For existing buildings, the eligible basis is
the cost of acquisition plus rehabilitation
expenditures not treated as a separate new
building under section 42(e) incurred by the
close of the first year of the credit period.
If the housing credit agency has entered
an increased percentage in Part I, line 3b,
multiply the eligible basis by the increased
percentage and enter the result.
Residential rental property may qualify
for the credit even though part of the
building in which the residential rental units
are located is used for commercial use. Do

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-3-

not include the cost of the nonresident rental
property. However, you may generally
include the basis of common areas or tenant
facilities, such as swimming pools or parking
areas, provided there is no separate fee for
the use of these facilities and they are made
available on a comparable basis to all
tenants in the project.
Buildings placed in service before
July 31, 2008. You must reduce the
eligible basis by the amount of any federal
grant received. Also reduce the eligible
basis by the entire basis allocable to
non-low-income units that are above
average quality standard of the low-income
units in the building. You may, however,
include a portion of the basis of these
non-low-income units if the cost of any of
these units does not exceed by more than
15% the average cost of all low-income
units in the building, and you elect to
exclude this excess cost from the eligible
basis by checking the “Yes” box for line 9b.
See section 42(d)(3).
You may elect to reduce the eligible
basis by the principal amount of any
outstanding below-market federal loan or
the proceeds of any tax-exempt obligation to
obtain a higher credit percentage. To make
this election, check the “Yes” box in Part II,
line 9a. Reduce the eligible basis by the
principal amount of such loan or obligation
proceeds before entering the amount on line
7. You must reduce the eligible basis by the
principal amount of such loan or obligation
proceeds, or any federal grant received,
before multiplying the eligible basis by the
increased percentage in Part I, line 3b.
Buildings placed in service after July
30, 2008. The eligible basis shall not
include any costs paid by the proceeds of a
federal grant. Also, reduce the eligible basis
by the entire basis allocable to
non-low-income units that are above
average quality standard of the low-income
units in the building. You may, however,
include a portion of the basis of these
non-low-income units if the cost of any of
these units does not exceed by more than
15% the average cost of all low-income
units in the building, and you elect to
exclude this excess cost from the eligible
basis by checking the “Yes” box for line 9b.
See section 42(d)(3).
You may elect to reduce the eligible
basis by the proceeds of any tax-exempt
obligation to obtain a higher credit
percentage. To make this election, check
the “Yes” box in Part II, line 9a. Reduce the
eligible basis by the obligation proceeds
before entering the amount on line 7. You
must reduce the eligible basis by such
obligation proceeds before multiplying the
eligible basis by the increased percentage in
Part I, line 3b.
Line 8a. Multiply the eligible basis of the
building shown on line 7 by the smaller of
the unit fraction or the floor space fraction as
of the close of the first year of the credit
period and enter the result on line 8a.
Low-income units are units occupied by
qualifying tenants, while residential rental
units are all units, whether or not occupied.
See the instructions for Part I, line 3a.
Line 8b. Each building is considered a
separate project under section 42(g)(3)(D)
unless, before the close of the first calendar
year in the project period (defined in section

42(h)(1)(F)(ii)), each building that is (or will
be) part of a multiple building project is
identified by attaching the statement
described below.
The minimum set-aside requirement
(see the instructions for line 10c) is a
project-based test.
The statement must be attached to this
Form 8609 and include:
• The name and address of the project and
each building in the project,
• The BIN of each building in the project,
• The aggregate credit dollar amount for the
project, and
• The credit allocated to each building in
the project.

!

CAUTION

Notwithstanding a checked “Yes”
box on line 8b, failure to attach a
CAUTION
statement providing the above
required information will result in each
building being considered a separate project
under section 42(g)(3)(D).
Two or more qualified low-income
buildings may be included in a multiple
building project only if they:
• Are located on the same tract of land,
unless all of the dwelling units in all of the
buildings being aggregated in the multiple
building project are low-income units (see
section 42(g)(7));
• Are owned by the same person for federal
tax purposes;
• Are financed under a common plan of
financing; and
• Have similarly constructed housing units.
A qualified low-income building includes
residential rental property that is an
apartment building, a single-family dwelling,
a town house, a row house, a duplex, or a
condominium.
Line 9a. Follow the instructions that apply
for the date the building was placed in
service.
Buildings placed in service before
July 31, 2008. You may elect to reduce the
eligible basis by the principal amount of any
outstanding below-market federal loan or
the proceeds of any tax-exempt obligation
and claim the 70% present value credit on
the remaining eligible basis. However, if you
make this election, you may not claim the
30% present value credit on the portion of
the basis that was financed with the
below-market federal loan or the tax-exempt
obligation.
Buildings placed in service after July
30, 2008. You may elect to reduce the
eligible basis by the proceeds of any
tax-exempt obligation and claim the 70%
present value credit on the remaining
eligible basis. A minimum applicable
percentage of 9% is in effect for new
non-federally subsidized buildings placed in
service after July 30, 2008, unless the
housing credit agency determines a lesser
amount is necessary to assure project
feasibility. However, if you make this
election, you may not claim the 30% present
value credit on the portion of the basis that
was financed with the tax-exempt obligation.
Line 9b. See the instructions for Part II,
line 7, that apply for the date the building
was placed in service.
Line 10a. You may elect to begin the credit
period in the tax year after the building is
placed in service. Once made, the election
is irrevocable.

!

Note. Section 42(g)(3)(B)(iii) provides
special rules for determining the start of the
credit period for certain multiple building
projects.
Line 10b. Partnerships with 35 or more
partners are treated as the taxpayer for
purposes of recapture unless an election is
made not to treat the partnership as the
taxpayer. Check the “Yes” box if you do not
want the partnership to be treated as the
taxpayer for purposes of recapture. Once
made, the election is irrevocable
Line 10c. You must meet the minimum
set-aside requirements under section
42(g)(1) for the project by electing one of the
following tests.
• 20-50 Test. 20% or more of the
residential units in the project must be both
rent restricted and occupied by individuals
whose income is 50% or less of the area
median gross income or
• 40-60 Test. 40% or more of the
residential units in the project must be both
rent restricted and occupied by individuals
whose income is 60% or less of the area
median gross income.
By electing the 20-50 test, the
qualifying income limit for all
CAUTION
low-income individuals in the project
is determined by reference to 50% of area
median gross income.
Gulf Opportunity (GO) Zone. For
purposes of the 20-50 and 40-60 tests
defined above, the “national
nonmetropolitan median gross income” will
be substituted for the “area median gross
income” for all property placed in service
during 2006, 2007, or 2008 in a
nonmetropolitan area in the Gulf Opportunity
(GO) Zone.
Once made, the election is irrevocable.
Note. Owners of buildings in projects
located in New York City may not use the
40-60 Test. Instead, they may use the 25-60
Test. Under the 25-60 Test, 25% or more of
the residential units in the project must be
both rent restricted and occupied by
individuals whose income is 60% or less of
the area median gross income (see section
142(d)(6)).
Once made, the election is irrevocable.
Rural projects. For purposes of the
20-50, 40-60, and 25-60 tests, “national
non-metropolitan median income” will be
used for determining income if it exceeds
“area median gross income”, but only for
determinations of income made after July
30, 2008, and buildings with an allocation of
credit. See section 42(i)(8) for details.

!

The minimum set-aside requirement
must be met by the close of the first
CAUTION
year of the credit period in order to
claim any credit for the first year or for any
subsequent years.
Line 10d. The deep rent skewed 15-40
election is not an additional test for
satisfying the minimum set-aside
requirements of section 42(g)(1). The 15-40
test is an election that relates to the
determination of a low-income tenant’s
income. Generally, a continuing resident’s
income may increase up to 140% of the
applicable income limit (50% or less or 60%
or less of the area median gross income (or,
when applicable, national nonmetropolitan

!

-4-

median gross income or national
non-metropolitan median income) under the
minimum set-aside rules described earlier in
Line 10c). When the deep rent skewed
election is made, the income of a continuing
resident may increase up to 170% of the
applicable income limit. If this election is
made, at least 15% of all low-income units in
the project must be occupied at all times
during the compliance period by tenants
whose income is 40% or less of the area
median gross income (or, when applicable,
national nonmetropolitan median gross
income or national non-metropolitan median
income). A deep rent skewed project itself
must meet the requirements of section
142(d)(4)(B). Once made, the election is
irrevocable.
Privacy Act and Paperwork Reduction
Act Notice. We ask for the information on
this form to carry out the Internal Revenue
laws of the United States. Claiming this
credit is voluntary; however, if you do claim
the credit, sections 42, 6001, and 6011
require you to provide this information.
Section 6109 requires you to provide your
taxpayer identifying number (SSN, EIN, or
ITIN). We need this information to ensure
that you are complying with the revenue
laws and to allow us to figure and collect the
right amount of tax. We may disclose this
information to the Department of Justice for
civil or criminal litigation, and to cities,
states, the District of Columbia, and U.S.
commonwealths and possessions for use in
administering their tax laws. We may also
disclose this information to other countries
under a tax treaty, to federal and state
agencies to enforce federal nontax criminal
laws, or to federal law enforcement and
intelligence agencies to combat terrorism.
Failure to provide this information may delay
or prevent processing your claim. Providing
false information may subject you to
penalties.
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.
The time needed to complete and file the
form will vary depending on individual
circumstances. The estimated average time
is:
Learning about the law or the
form . . . . . . . . . . . . . . . . . . . 4 hr., 10 min.
Recordkeeping . . . . . . . . . . . . 10 hr., 45 min.
Preparing and sending the form
to the IRS . . . . . . . . . . . . . . . . 4 hr., 31 min.

If you have comments concerning the
accuracy of these time estimates or
suggestions for making these forms simpler,
we would be happy to hear from you. You
can write to the Internal Revenue Service,
Tax Products Coordinating Committee,
SE:W:CAR:MP:T:T:SP, 1111 Constitution
Ave. NW, IR-6526, Washington, DC 20224.
Do not send the tax form to this office.
Instead, see Filing Requirement, earlier.