Generally speaking, the low-income housing credit is a credit of 70% of the qualified basis of each new low-income building placed into service after 1986. If the building is a federally subsidized building (either new or existing), the credit is 30% of the qualified basis.
You can claim the low-income housing credit if either of the following requirements apply:
You are filing a Schedule C, and you own residential rental buildings that provide low-income housing; or
You received a K-1 from a partnership, S-corporation, estate, or trust, and the K-1 indicates that you can claim the credit.
You take the credit over a 10-year period. In addition, there is a 15-year compliance period during which the building must continue to meet certain requirements.
Use Form 8586 to calculate the low-income housing credit. The interview topic, Low-Income Housing Credit, will help you fill out the form.
For more information, see the following topics:
IRS Instructions: Form 8586, Low-Income Housing Credit
Explain This Form: Form 8586, Low-Income Housing Credit