IRS Instruction 8609-A – The Low-Income Housing Tax Credit (LIHTC) program is a vital federal incentive designed to encourage the development and preservation of affordable rental housing for low-income households. Administered by the IRS in partnership with state housing credit agencies, it allows building owners to claim tax credits based on the portion of a property dedicated to low-income tenants. Central to maintaining compliance and claiming these credits is IRS Form 8609-A, the Annual Statement for Low-Income Housing Credit. This form must be filed each year during the 15-year compliance period to report adherence to program rules and calculate the allowable credit.
In this SEO-optimized guide, we’ll break down the instructions for Form 8609-A, including who needs to file, key filing requirements, line-by-line guidance, and tips for avoiding common pitfalls. Whether you’re a property owner, investor, or tax professional, understanding these instructions ensures you maximize credits while staying compliant. We’ll draw from the latest IRS resources, including the revised December 2025 instructions, to provide accurate, up-to-date information.
What Is IRS Form 8609-A and Its Purpose?
Form 8609-A serves as an annual certification tool for owners of qualified low-income housing projects. Its primary purposes are:
- Reporting Compliance: It verifies that the building continues to meet the low-income housing provisions under Section 42 of the Internal Revenue Code, such as maintaining the required percentage of low-income units.
- Calculating the Credit: The form computes the annual low-income housing credit amount based on the building’s qualified basis, which reflects the portion of the property serving low-income residents.
- Monitoring Over Time: Filed annually for 15 years, it ensures ongoing adherence to program rules, including minimum set-aside requirements (e.g., 20-50 test, 40-60 test, or 15-40 deep rent skewed election).
Owners typically receive an initial allocation via Form 8609 from a state housing credit agency, which assigns a Building Identification Number (BIN). Form 8609-A builds on this by tracking yearly performance. For pass-through entities like partnerships or S corporations, the entity files the form, and individual partners or shareholders claim their share of the credit on Form 8586 using Schedule K-1 data.
Separate forms are required for acquisitions of existing buildings and for rehabilitation expenditures treated as new buildings under Section 42(e).
Who Must File Form 8609-A?
If you own a residential rental building that qualifies for the LIHTC, you are required to file Form 8609-A annually during the 15-year compliance period. This includes:
- Building Owners: Sole proprietors, partnerships, S corporations, estates, or trusts that have received a credit allocation via Form 8609.
- Pass-Through Entities: The entity itself files Form 8609-A attached to its tax return, even if the credits flow through to investors.
- Multiple Owners: Each owner’s share is reported proportionally.
Individual investors in pass-through entities do not file Form 8609-A; instead, they use the information to complete Form 8586. Failure to file or maintain compliance can result in credit disallowance or recapture.
When and How to File Form 8609-A?
Filing Form 8609-A is tied to your annual tax return schedule:
- Deadline: Attach it to your federal income tax return for the year in question, filed by the due date (including extensions).
- Where to File: Submit it with your tax return to the IRS service center designated for your location or electronically if e-filing your return.
- Frequency: One form per building (or separate for acquisition vs. rehabilitation) for each of the 15 compliance years.
No separate mailing is needed—it’s part of your standard tax filing. Keep records of the original signed Form 8609 (or a copy) from the housing agency, as certification is required on the form.
Step-by-Step Instructions for Completing Form 8609-A
The form is divided into two parts: Compliance Information (Part I) and Computation of Credit (Part II). Follow these line-by-line guidelines based on the latest instructions.
Part I: Compliance Information
- Item A: Enter the BIN from Form 8609, Part I, Item E.
- Item B: Check the box for the type of allocation (new/existing building or rehabilitation).
- Item C: Certify you have the original Form 8609; if not, the credit may be disallowed.
- Item D: Confirm the building remained in compliance; if “No,” check for recapture on Form 8611.
- Item E: Indicate if qualified basis decreased; if “Yes,” calculate the reduction and review recapture rules.
If there’s non-compliance (e.g., failing the minimum set-aside), the qualified basis drops to zero, potentially triggering recapture.
Part II: Computation of Credit
This section calculates the annual credit. Key terms include:
- Eligible Basis: Costs attributable to low-income units, adjusted for high-cost areas or reductions (e.g., federal grants).
- Qualified Basis: Eligible basis multiplied by the low-income portion (unit or floor space fraction).
- Credit Percentage: From Form 8609, typically 4% or 9%, with minimums for certain projects.
- Line 1: Enter eligible basis from Form 8609, Line 7, with adjustments for grants, energy credits (post-2022 exclusions), and at-risk rules.
- Line 2: Low-income portion (to four decimals); use first-year modified percentage if applicable. Special relief for COVID-19 housing (2020–2022) via IRS Notices.
- Line 3: Qualified basis (Line 1 × Line 2), capped if noted on Form 8609.
- Line 4: Partial year fraction (days owned/365) if not full year.
- Line 5: Credit percentage as a decimal; adjust for federal subsidies.
- Line 6: Base credit (Line 3 × Line 5, or adjusted for partial year).
- Lines 7–12: Handle additions to qualified basis (e.g., increased low-income units); use two-thirds of the credit percentage.
- Line 13: Adjusted credit from additions.
- Line 14: Reduce for federal grants (calculation varies by placement date).
- Line 16: Your share of the credit (proportional ownership).
- Line 17: Add back deferred first-year credit in later years.
- Line 18: Total credit to report on Form 8586.
For buildings placed in service after December 31, 2007, the credit is not limited by the Alternative Minimum Tax (AMT).
Key Compliance Requirements and Recapture Events
Compliance is monitored through annual filings, ensuring:
- Minimum set-aside tests are met.
- Units are suitable for occupancy and rent-restricted.
- Low-income fractions are accurately reported.
Recapture occurs via Form 8611 if:
- Qualified basis decreases.
- The building is disposed without proper procedures (e.g., no bond posted for pre-2008 placements).
- Non-compliance events like failing set-asides.
De minimis rules allow waivers for minor errors or deferred recapture for small partnership interest dispositions (up to 33 1/3%). Post-2008 dispositions require reasonable expectation of continued low-income use.
Recent Developments and Updates for 2026
As of January 30, 2026, there are no major recent developments for Form 8609-A. However, ongoing relief from IRS Notices (2021-12, 2021-17, 2022-5) applies to COVID-19 impacts, such as temporary emergency housing and adjustments for increased low-income units through 2022. Always check IRS.gov for legislation post-publication.
Frequently Asked Questions (FAQs) About Form 8609-A
What if my building was placed in service before July 31, 2008?
Federal grant reductions and disposition rules differ; grants reduce basis during the compliance period, and dispositions may require bonds to avoid recapture.
How do I handle multiple buildings in a project?
File a separate Form 8609-A for each building with its own BIN.
Can I e-file Form 8609-A?
Yes, if attached to an e-filed tax return.
What records should I keep?
Maintain all documentation related to compliance, basis calculations, and Form 8609 for as long as they may be relevant (estimated burden: about 11 hours total per form).
What happens if I miss a filing?
You risk credit disallowance and penalties; amend your return promptly.
Conclusion: Maximize Your LIHTC Benefits with Proper Filing
Navigating IRS Form 8609-A instructions is essential for claiming the full low-income housing credit while avoiding recapture risks. By following these guidelines and consulting the official IRS resources, you can ensure compliance and support affordable housing initiatives. For personalized advice, consult a tax professional or visit IRS.gov for the latest forms and instructions.
Remember, the LIHTC program not only provides tax savings but also contributes to community development. Stay updated, file accurately, and leverage this powerful incentive.