Form 8611 serves as a reporting tool for taxpayers who need to recapture a portion or all of the low-income housing credit they previously claimed. This may be required when specific events or changes in circumstances occur that disqualify a property from the LIHTC program, such as noncompliance with the program’s requirements, a reduction in the qualified basis of the building, or the sale of the property.
By submitting Form 8611, taxpayers can calculate the amount of tax credit that needs to be recaptured and added back to their tax liability. This ensures that only qualified low-income building projects and properties continue to receive tax benefits, maintaining the integrity of the LIHTC program and safeguarding its purpose to provide low-income housing options for those in need.
Discover when to use Form 8611, the essential tax document to recapture decreases in credits for low-income housing projects. Learn how this form comes into play in various situations, ensuring you remain compliant with IRS regulations while making the most of available tax benefits.
Noncompliance with LIHTC requirements: If a property fails to comply with the low-income housing requirements set forth by the LIHTC program within a reasonable period, the owner may need to recapture the tax credits previously claimed.
Reduction in qualified basis: If the qualified basis decreased for a low-income building, this might result in the recapture of some or all of the tax credits.
Sale of the property: When a property that has claimed low-income housing tax credits is sold, the owner may need to recapture the credits if the building no longer meets the program’s eligibility criteria.
Change in applicable fraction: If the applicable fraction for a property changed in a given tax year, resulting in a lower percentage of low-income units, Form 8611 may be required to recapture the excess tax credits.
" Undoubtedly one of the best eSignature application available in the market right now. Would love to recommend Fill. "
Ready to get started
with this template?