Use Form 8611 to calculate and report the recapture of the low-income housing credit in certain situations such as when the qualified basis decreases, a building is disposed of, or a change occurs in the amount for which you are financially at risk on the building.
What is Form 8611?
Form 8611 is used to recalculate the amount of low-income housing credit when the qualified basis of the building decreases from one year to the next, or when there is a disposal of a building or an ownership interest therein. Decrease of the qualified basis can occur when units are no longer occupied by income-qualified tenants, rent restricted, or when it no longer meets required set-aside requirements. Credit recapture is not applicable if the disposal of the building or ownership interest satisfies certain criteria, the decrease does not exceed the credit taken in subsequent years, or the decrease is due to a casualty loss but the property is restored or replaced. When filling in Form 8611, one needs to refer to Forms 8586, 8609, 8609-A, 8693 and keep a copy of all these forms during the 3 years after the 15-year compliance period ends.
IRS Form 8611 – Who Needs to Fill It Out?
IRS Form 8611 needs to be filled out by any party who must recapture part of the low-income housing credit claimed in previous years. This includes when the qualified basis has decreased, when a building or interest therein has been disposed of, when units have been vacated, or when the project does not meet set-aside requirements. To complete the form, prior forms like 8586, 8609, 8609-A, and 8693 are necessary. Recapture is not applicable if the decrease in basis does not exceed the additions allowed, or the qualified basis is reduced due to a casualty loss that is restored or replaced. Recordkeeping should also be maintained for 3 years after the 15-year compliance period ends.
Step-by-Step: Form 8611 Instructions For Filling Out the Document
Filling out Form 8611 involves providing various pieces of relevant information, such as section references to the Internal Revenue Code, information about decreases in qualified basis (sourced from sections 42(i)(3)(A)(ii)-(i)(3)(B)(ii), 42(g)(1), and 42(k)), dispositions of buildings (sourced from section 42(j)), and information regarding the applicable forms (Forms 8586, 8609, 8609-A, 8611, and 8693). Additionally, reference is made to section 42(j)(5) which relates to dispositions of ownership interests in a building that is held through a partnership. It is important to keep records of these forms for 3 years following the end of the 15-year compliance period for the purpose of verifying changes from year to year.
Below, we present a table that will help you understand how to fill out Form 8611.
|Information Required for Form 8611||Details|
|Relevant Information||Section references to the Internal Revenue Code, qualified basis, dispositions, etc.|
|Forms||References to Forms 8586, 8609, 8609-A, 8611, 8693|
|Recordkeeping||Keep records for 3 years to verify changes from year to year|
Do You Need to File Form 8611 Each Year?
You must use this form if you need to recapture part of the low-income housing credit that was taken in previous years due to decreases in qualified basis (e.g., a change in eligible basis or the applicable fraction). It is also necessary to use Form 8611 if you disposed of a building, or your interest therein, without following the procedures that would have prevented credit recapture. However, no recapture is required if the disposed building is expected to continue as a qualified low-income building, among other conditions. Make sure to keep copies of Forms 8586, 8609, 8609-A, 8611, and 8693 for 3 years after the 15-year compliance period ends in order to verify any changes in qualified basis.
Download the official IRS Form 8611 PDF
On the official IRS website, you will find a link to download Form 8611. However, to make it easier for you, we are providing the link in our article, which comes directly from the official irs.gov website! Click to download: Form 8611