IRS Issues Revised Form 8609

The Internal Revenue Service (IRS) has issued its revised Form 8609, “Low-Income Housing Credit Allocation and Certification,” (Rev. 12/08), which owners of low-income multifamily housing can use to obtain a housing credit allocation for each building in their property. Following is a summary of some of the changes, which affect buildings placed in service after July 30, 2008.

For new non-federally subsidized buildings placed in service after July 30, 2008, but before December 31, 2013, a minimum applicable credit percentage of 9 percent is in effect. This 9 percent 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, the owner should not enter less than 9 percent, unless the housing credit agency determines that a lesser amount is necessary to assure project feasibility.

For buildings placed in service after July 30, 2008, the definition of a “difficult development area” has been expanded to include any building designed by the state credit agency in order to be financially feasible as part of a qualified low-income housing project. The housing agency may increase the eligible basis of buildings in the Gulf Opportunity (GO) Zone, Rita GO Zone, and Wilma GO Zone if those buildings were placed in service during the period beginning on January 1, 2006 and ending December 31, 2010.

The definition of a “federally subsidized” building has been narrowed to include only buildings with outstanding tax-exempt bond financing.

The eligible basis of a building shall not include any costs paid by a federal grant. Also, the eligible basis cannot be reduced by the principle amount of any below-market federal loan.

For a copy of Form 8609 and Instructions, go to www.irs.gov.