Form 8611 Recapture of Low-Income Housing Credit

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Form

8611

(Rev. December 2019)
Department of the Treasury
Internal Revenue Service
A Name(s) shown on return

Recapture of Low-Income Housing Credit

OMB No. 1545-1035

Attach to your return.
▶ Go to www.irs.gov/Form8611 for instructions and the latest information.
Note: Complete a separate Form 8611 for each building to which recapture applies.
▶

Attachment
Sequence No. 90
B Identifying number

D Building identification
number (BIN)

C

Address of building (as shown on Form 8609)

F

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

E Date placed in service (from
Form 8609)

DRAFT AS OF
November 4, 2019
DO NOT FILE
(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). However, section 42(j)(5) partnerships must complete lines 1 through 7.
1

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

2

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

3

Credits subject to recapture. Subtract line 2 from line 1 .

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4

Credit recapture percentage (see instructions) .

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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) . . . . . . . . . . . . . . . . . . . . . . . .

6

7

Amount of accelerated portion recaptured (see instructions if prior recapture on building).
Multiply line 5 by 6. Section 42(j)(5) partnerships, go to line 16. All other flow-through entities
enter the result here and enter each recipient’s share in the appropriate box of Schedule K-1.
Generally, flow-through entities 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.) . . .

7

8

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

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8

9

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

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9

10

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

11

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

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) . . . . . . . . . . . . . . . . . . . . . . . . . .

14

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
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) . . . . . . . . . . . . . .

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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)

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17

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

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For Paperwork Reduction Act Notice, see instructions.

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17

Cat. No. 63983Q

Form 8611 (Rev. 12-2019)

Page 2

Form 8611 (Rev. 12-2019)

General Instructions

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.

Section references are to the Internal
Revenue Code.

Future Developments

• The qualified basis is reduced because
of a casualty loss, provided the property
is restored or replaced within a
reasonable period.

Recordkeeping

DRAFT AS OF
November 4, 2019
DO NOT FILE

For the latest information about
developments related to Form 8611 and
its instructions, such as legislation
enacted after they were published, go to
www.irs.gov/Form8611.

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);

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.

• 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

Decrease in qualified basis. The
decrease may result from a change in
the eligible basis or the applicable
fraction. For example, a decrease in
qualified basis may exist when units are
not occupied by income-qualified
tenants under section 42(i)(3)(A)(ii), units
are not rent restricted under section
42(g)(2), units are not suitable for
occupancy as described in section 42(i)
(3)(B)(ii), or the project no longer meets
the minimum set aside requirements of
section 42(g)(1).

• 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 an ownership interest
in a building you held through a
partnership to which section 42(j)(5)
applies;

Building dispositions. 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.

• The decrease in qualified basis does
not exceed the additions to qualified
basis for which credits were allowable in
years after the first year of the credit
period; or

See section 42(j) for more information.

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. However, section
42(j)(5) partnerships must complete lines
1 through 7.
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
e

Enter the amount from line 10* . . .
Multiply a by 2 . . . . . . . .
Enter the amount from line 11* . . .
Subtract c from b . . . . . . .
Enter decimal amount figured in step 1
enter -0- . . . . . . . . . .

f
g
h
i

Multiply d by e . . . . . . . . . . . . . .
Subtract f from d . . . . . . . . . . . . .
Divide line 16* by line 15*. Enter the result here
. . .
Multiply g by h. Enter this amount on line 2. (If more than
on i from all worksheets and enter the total on line 2.) .

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of
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the instructions for line
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14*. If line 14* does
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one worksheet is
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completed,
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not apply to you,
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add the
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amounts
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a
b
c
d
e
f
g
h
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Page 3

Form 8611 (Rev. 12-2019)

Line 2. Determine the amount to enter
on this line by completing a separate
Line 2 Worksheet for each prior year for
which line 7 of Form 8609-A (or
predecessor, Schedule A (Form 8609))
was completed.

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

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).

DRAFT AS OF
November 4, 2019
DO NOT FILE

Line 4. Enter the credit recapture
percentage, expressed as a decimal
carried to at least 3 places, from the
table below.
IF the recapture
event occurs
in . . .

THEN
enter on
line 4 . . .

Years 2 through 11 .

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.333

Year 12 .

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.267

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Year 13 .

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.200

Year 14 .

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.133

Year 15 .

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.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, the 40-60 test, or the average
income 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 or
the average income test to meet the setaside requirements. You must recapture
the entire amount shown on line 5.
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.
Line 9. Figure 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.

Line 11. Figure the interest separately
for each prior tax year for which a credit
is being recaptured. Interest must be
figured 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 figure daily
compound interest were published in
Rev. Proc. 95-17, 1995-1 C.B. 556. The
interest rate in effect through December
31, 2019, is shown in Rev. Rul. 2019-21,
2019-38 I.R.B. 708. For periods after
December 31, 2019, 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 on Schedule 2
(Form 1040 or 1040-SR), see the
instructions for line 8 (other taxes) in the
Instructions for Form 1040 and 1040-SR.
Form 1120 filers report the recapture tax
on Form 1120, Schedule J, line 9b.

Line 15. Carry forward the low-income
housing credit attributable to this building
to the next tax year. See the Instructions
for Form 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 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, an
individual and his or her spouse (and
their estates) are treated as one partner.

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
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.
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 .

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. 8 hr., 21 min.

Learning about the
law or the form . .

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. 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.