Low Income Housing Tax Credit
Taxpayers subject to tax under MGL ch 62 who invest in a qualified low-income housing project located in Massachusetts may be eligible for the Low Income Housing Tax Credit (LIHTC). The Department of Housing and Community Development (DHCD) determines which low-income housing projects will qualify for the LIHTC, which properties may generate a LIHTC for investors, and ultimately allocates the amount of credit a taxpayer may claim based on a total pool of $40,000,000. This LIHTC may be claimed in the year that a “qualified Massachusetts project” is placed in service and for each of the four subsequent taxable years. The properties must also meet the requirements established by Massachusetts and federal laws, and be owned by a taxpayer who enters into a regulatory agreement with DHCD.
Any unused LIHTC may be carried forward for the next 5 tax years. Alternatively, unused credits may be transferred. If an event or circumstance occurs that results, or would have resulted, in the recapture of any portion of a federal Low Income Housing Credit, then the Massachusetts LIHTC may also be subject to recapture. The LIHTC is not refundable.
To claim the LIHTC, enter the LIHTC certificate number and the amount of the LIHTC using credit code LOWINC on the Schedule CMS. Supporting documentation must be enclosed with the return or the LIHTC may be disallowed. For further information on documentation see the Transfer LIHC: Low-Income Housing Credit Statement form and Allotment Schedule LIHC: Low-Income Housing Credit Summary form. For further information regarding this credit, contact DHCD, Division of Private Housing, at (617) 727-7824.