LIHTC IRS forms: 8609, 8609-A, 8823, 8586 and 8611 explained

The IRS’s LIHTC paperwork is short compared to what the agency and the investor require, but every line on it has a tax consequence. This guide covers who files each form and the lines that most often cause problems. Form PDFs and instructions are at irs.gov/forms-pubs.

The forms at a glance

Form	Filed by	When	Purpose
8609 (Rev. Dec. 2021; instructions Rev. Dec. 2025)	Agency (Part I), owner (Part II)	Part I after placed in service; owner files the completed original once with the IRS by the due date of its first return with Form 8609-A	Allocation and the owner’s first-year certification and elections
8609-A	Owner	Every year of the compliance period, per building	Annual compliance statement and credit computation
8586 (Rev. Dec. 2023)	Taxpayer claiming credit	Each year	Totals the credit and sends it to Form 3800
8823 (Rev. June 2023)	Agency	Within 45 days after the correction period ends	Report of noncompliance or building disposition
8611 (Rev. Dec. 2021)	Taxpayer	Year of the recapture event	Computes recapture

Form 8609, Part I: the agency’s allocation

Line	What it says	Watch for
1a, 1b	Date of allocation; maximum housing credit dollar amount	1b should equal line 2 x line 3a; for bond projects needing no allocation, it is the credit allowable under 42(h)(4)
2	Maximum applicable credit percentage	9% or 4% floor buildings; the instructions note Rev. Rul. 2021-20 limits on the 4% floor for certain arrangements
3a	Maximum qualified basis	Your Part II line 8a can’t exceed it
3b	Whether eligible basis was increased under the high-cost area rules, and the percentage	Up to 130% for QCT, DDA or state designation; see the basis boost
4	Percentage of aggregate basis financed by tax-exempt bonds	The 50% or 25% bond test shows up here
5a	Date placed in service	Starts the credit period (or the year after, by election)
6a-f	Building type: new and federally subsidized, new and not, existing, 42(e) rehab subsidized or not, nonprofit set-aside	Determines the rate; acquisition and rehab get separate 8609s

Form 8609, Part II: the owner’s elections

These are completed once, for the first year of the credit period, and several are irrevocable.

Line	Content	Note
7	Eligible basis of the building	Reduce by tax-exempt bond proceeds first if electing under 9a
8a	Original qualified basis at the close of the first year	Eligible basis x lesser of unit or floor-space fraction
8b	Multiple building project?	Requires an attached statement listing each building, BIN and credit amounts, before the close of the first calendar year of the project period. Without it, each building is its own project for the set-aside test
9a	Election to reduce eligible basis by tax-exempt bond proceeds (42(i)(2)(B))	Lets a bond-financed new building claim the 70% credit on the rest of its basis
9b	Election to reduce eligible basis for market units above low-income quality (42(d)(3)(B))
10a	Elect to begin the credit period the year after placed in service	Irrevocable
10b	Elect not to treat a partnership with 35 or more partners as the taxpayer for recapture	Irrevocable
10c	Minimum set-aside: 20-50, 40-60, average income, or 25-60 (NYC only)	Irrevocable; see set-aside elections
10d	Deep rent skewed 15-40 election	Raises the over-income threshold to 170%

The minimum set-aside must be met by the close of the first year of the credit period to claim any credit for that year or later.

Form 8609-A: every year

Part I asks three yes/no questions: do you have the agency-signed 8609; did the building qualify and meet section 42 at year-end; and was there a decrease in qualified basis. A “no” on either of the first two means stop: no credit for the year.

Part II computes the credit:

• eligible basis x low-income portion (lesser of unit or floor-space fraction) = qualified basis;
• x the credit percentage from Form 8609 = the year’s credit;
• additions to qualified basis after the first year earn credit at two-thirds of the rate (the form subtracts one-third, per 42(f)(3));
• less any disallowance for federal grants;
• capped at Form 8609 Part I line 1b;
• adjusted for the first-year deferral: the first year’s credit is prorated by month under 42(f)(2), and the shortfall is allowed in year 11.

Form 8586: claiming the credit

Line 1 counts the 8609-As attached; line 2 asks whether any building’s qualified basis decreased (and lists the BINs). Credits from pass-throughs go on line 4. Partnerships and S corporations stop at line 5 and report on Schedule K; others carry the total to Form 3800, Part III. The instructions confirm the credit applies only to buildings in projects meeting a minimum set-aside, and, except for bond-financed buildings, only to buildings that received an allocation.

Form 8823: the agency’s report

Agencies monitor under 26 CFR 1.42-5: on-site inspections and file reviews by the end of the second calendar year after the last building is placed in service and at least once every 3 years after, on a minimum sample of low-income units from a table in the regulation (for example, 21 units for a project with 82 to 101 low-income units). When the agency finds noncompliance, it notifies the owner, allows a correction period of up to 90 days (extendable up to 6 months for good cause), and files Form 8823 no earlier than the end of the correction period and no later than 45 days after it, whether or not the problem was fixed.

Line 11 categories on the June 2023 form include:

Line	Issue
11a	Household income above the limit at initial occupancy
11b	Annual recertification not done or not documented
11c	Violations of UPCS or local inspection standards, including casualty losses
11d	Owner’s annual certifications missing, incomplete or inaccurate
11e	Changes in eligible basis or applicable percentage
11f	Failed minimum set-aside
11g	Gross rent above limits
11h	Not available to the general public
11i	Violation of the available unit rule, 42(g)(2)(D)(ii)
11j	Violation of the vacant unit rule, Reg. 1.42-5(c)(1)(ix)
11k	Extended use agreement not executed and recorded in time
11l	Nonqualified full-time students
11m	Utility allowance not calculated properly
11n	Owner didn’t respond to monitoring requests
11o	Units used on a transient basis
11p	Building no longer in compliance or participating
11q	Other

Line 13 reports dispositions by sale, foreclosure, destruction or other. The IRS guide for agencies completing the form is Publication 5913.

Form 8611: recapture

If qualified basis falls during the compliance period, Form 8611 computes the recapture: prior credits, times the recapture percentage (.333 for years 2 to 11, then .267, .200, .133 and .067 for years 12 to 15), times the percentage decrease in qualified basis, plus interest. If the decrease takes the project below its minimum set-aside, or a disposition doesn’t meet the reasonable-expectation exception, the decrease is 100%. Full walk-through in credit recapture.

Record retention

Owners must keep records for each year for at least 6 years after the return’s due date (with extensions), and keep first-year records for 6 years beyond the due date of the return for the last year of the compliance period (26 CFR 1.42-5(b)(2)). The Form 8611 instructions add: keep Forms 8586, 8609, 8609-A and 8611 for 3 years after the 15-year compliance period ends.