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 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
Enter the eligible basis (in dollars) of the building. Eligible basis doesn't 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. Don't 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
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 doesn't 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.
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.
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 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.
Notwithstanding a checked “Yes
” box on line 8b, failure to attach a statement providing the above required information will result in each building being
considered a separate project under section 42(g)(3)(D). The minimum set-aside requirement (see the instructions for line
10c) is a project-based test.
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 (including contiguous parcels), unless all of the dwelling units in all of the buildings
being aggregated in the multiple building project are rent restricted 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.
Follow the instructions that apply for the date the building was placed in service.
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.
See the instructions for Part II, line 7.
You may elect to begin the credit period in the tax year after the building is placed in service. Once made, the election
Section 42(g)(3)(B)(iii) provides special rules for determining the start of the credit period for certain multiple building
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 don't want the partnership to be treated as the taxpayer for purposes of recapture. Once made, the election is
You must meet the minimum set-aside requirements under section 42(g)(1) for the project by electing one of the following
20-50 Test. Twenty percent (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. Forty percent (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.
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.
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 is a project-based test and must be met by the close of the first year of the credit period
in order to claim any credit for the first year or for any subsequent years.
The deep rent skewed 15-40 election isn't 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 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 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.