The low-income housing credit is claimed on Form 8586-A. If the only low-income housing credits which you are claiming are those which you receive from flow-through entities like partnerships, S corporations, estates, or trusts, that's the only form you'll need to worry about.
If you're claiming a low-income housing credit directly, however, rather than as an investor or beneficiary in a flow-through entity, you'll need to perform some additional backup calculations. That's where Schedule A of Form 8609 comes in.
As the name implies, Schedule A is a companion form to Form 8609 (Low-Income Housing Credit Allocation Certification). If you're filling out Schedule A, you should have already received a copy of Form 8609 from the appropriate housing credit agency. Part I of the Form 8609 will have already been filled out by the housing credit agency. If you haven't done so already, you should complete Part II of the Form 8609 (but leave the signature section blank). Filing instructions are covered below.
Schedule A is a complicated form, so we suggest that you review the IRS instructions carefully before filling it out. Additional information about the form can be found in the Low-Income Housing Credit topic of the Interview.
We compute the qualified basis on line 3 by multiplying line 1 by line 2.
The qualified basis of the building can be zero under certain conditions.
These conditions include:
The minimum set-aside requirement elected for the project on Form 8609-A, line 10c (Part II, line 5c, on earlier revisions), is not met.
The deep-rent skewed test (15-40 Test) elected for the project on Form 8609, line 10d (Part II, line 5c, on the 1988 revision; Part II, line 5d, on the 1991 revision), is violated.
You disposed of the building or your entire interest therein during the tax year.
Other circumstances specified in the regulations under Section 42(j) of the Internal Revenue Code.
You may need to OVERRIDE line 3 if any of these conditions apply.
If the qualified basis of the building is zero, or if the building has an imputed qualified basis of zero, you may not claim a credit for the building for the tax year. Enter zero on lines 3 and 16 of Schedule A and disregard lines 4 through 15 and lines 17 and 18 .
If there's an amount entered on line 3, we compute line 6 as the product of line 3 and line 5.
If there's an amount entered on line 4, we compute line 6 as the product of line 4 and line 5.
If no amount is entered on line 7b, we blank out lines 7 through 12.
This calculation is similar to the calculation for line 6.
If there is an amount entered on line 7, we compute line 10 as the product of line 7 and line 9.
If there is an amount entered on line 8, we compute line 10 as the product of line 8 and line 9.
We calculate line 11c by subtracting the greater of line 11a or line 11b from line 3.
However, if the amount entered on line 11a or line 11b is greater than zero but less than line 7b , we enter on line 11c the amount shown on line 7.
When it comes time to prepare your return for filing, here's what you'll need to do:
Make a photocopy of each of your unsigned Forms 8609 (with Parts I and II completed).
Complete the signature section on each of the photocopies.
Keep the original copies you receive from the housing credit agencies so that copies can be made from the unsigned original copies and used for filing with future years' income tax returns.
Attach a completed Schedule A to the signed copy of the corresponding Form 8609.
If the maximum applicable credit percentage allocated to the building in Part I, line 2 of Form 8609 reflects an election made under section 42(b)(2)(A)(ii) of the Internal Revenue Code, attach a copy of the election statement and, if the binding agreement specifying the housing credit dollar amount is contained in a separate document, a copy of the binding agreement to Form 8609 for the first tax year in which the credit is claimed.
If the housing credit dollar amount allocated in Part I, line 1b of Form 8609 reflects an allocation made under section 42(h)(1)(E) or 42(h)(1)(F) of the Internal Revenue Code, attach a copy of the allocation document to Form 8609 for the first tax year in which the credit is claimed.
File Forms 8586, 8609, and Schedule A (Form 8609) for each year in which you are claiming the credit.
Continue filing Form(s) 8609 and Schedule A (Form 8609) for each year thereafter throughout the 15-year compliance period, even if you are not claiming the credit that year.