Federal Low Income Housing Tax Credit: Compliance Requirements

Owner must complete and submit Part II of IRS Form 8609 in the first taxable year the credit is claimed, and submit the original signed form to the IRS LIHTC Unit with the tax return.

Deadline: By the due date (including extensions) of the federal income tax return for the first year credit is claimed

Source: IRC §42(m); 26 CFR 1.42-5(c)(1); IRS Form 8609 Instructions (12/2025)

Owner must file IRS Form 8609-A annually for each building during the 15-year compliance period, reporting the applicable fraction and confirming ongoing compliance with set-aside requirements.

Deadline: Annually with the federal income tax return during the compliance period (due date with extensions)

Source: 26 CFR 1.42-5(c)(1); IRS Form 8609 Instructions; Oregon LIHTC Manual 2025

Owner must certify annually to the state housing credit agency (typically by December 31 or January 31 depending on state) that the project met all LIHTC compliance requirements for the preceding 12-month period, using the state's prescribed Owner's Annual Certification of Compliance form.

Deadline: Annual submission required; state-specific deadlines typically November 15 to January 31 depending on fiscal year calendar

Source: 26 CFR 1.42-5(c)(1); Missouri AMRS; Oregon LIHTC Manual; Massachusetts EOHLC; Ohio OHFA; South Carolina Authority

If owner discovers noncompliance (unit occupancy failure, rent overcharge, missing documentation, habitability defect, etc.), owner must notify the state housing credit agency immediately and submit a written remediation plan to bring property back into compliance.

Deadline: Owner must self-report noncompliance immediately upon discovery; corrective action plan must be submitted in writing within timeframe specified by state (typically 10-30 days)

Source: 26 CFR 1.42-5(e); Missouri LIHTC Manual; Oregon LIHTC Manual 2025

Owner must ensure rent charged does not exceed maximum allowable rent limits set by IRC §42(g)(2), calculated as a percentage of Area Median Income minus utility allowances. Rents must be updated annually per program rules.

Deadline: Rents must not exceed limits for any month during the compliance period; annual recalculation required based on updated AMI data

Source: IRC §42(g)(2); 26 CFR 1.42-5; State QAPs; Missouri and Oregon LIHTC Manuals 2025

Owner must pay annual compliance monitoring fees to the state housing credit agency (e.g., per-unit fees, typically $25-$35 per LIHTC unit annually). Initial fees due within 30 days of placed-in-service; subsequent annual fees due by February 1 or state-specified deadline.

Deadline: Initial fees: within 30 days of placed-in-service; Annual fees: due by February 1 or state-designated date throughout compliance period and extended use period

Source: State agency regulations (SC Housing Authority, Texas HFC, etc.); QAP Fee Schedules; State administrative rules

Owner must maintain the property in decent, safe, sanitary condition in accordance with Uniform Physical Condition Standards (UPCS) or local health, safety, and building codes. Any code violations must be retained and disclosed annually; deficiencies found during inspections must be reported unless self-corrected before inspection.

Deadline: Properties inspected on rolling basis (typically every 3 years minimum); violation reports must be retained and disclosed in annual certifications

Source: IRC §42(i)(3)(B); 26 CFR 1.42-5(d); Treasury Reg. 1.42-5(b)(3); IRS Form 8823 Guide; Multiple state manuals

Owner must maintain records for each building showing: total residential rental units; number and percentage of LIHTC units; income and occupancy information for each tenant-occupied unit; lease agreements; student status verification; and health/safety inspection records.

Deadline: Records must be created contemporaneously and available for review at any time; retention as specified below

Source: 26 CFR 1.42-5(b)(1)-(2); Multiple state compliance manuals; IRS Audit Technique Guide Chapter 4

Owner must retain all first-year credit period records for a minimum of 6 years after the due date (with extensions) for filing the federal income tax return for the LAST year of the 15-year compliance period (the 'extended 21-year retention rule').

Deadline: First-year files must be retained at least 21 years; all other year records at least 6 years after that tax year's return due date

Source: 26 CFR 1.42-5(b)(3); IRS Audit Technique Guide; Multiple state compliance manuals

Units must be occupied by households meeting income limits (20% at 50% AMI or 40% at 60% AMI, or Average Income Test); owner must verify tenant income at initial move-in and maintain documentation proving ongoing eligibility throughout the compliance period.

Deadline: Income verification required at lease commencement; documentation must be retained for the entire compliance period plus 6 years thereafter

Source: IRC §42(g); 26 CFR 1.42-5(b); Multiple state compliance manuals; IRS Audit Technique Guide

Owner must verify and document student status at move-in and annually for all occupants of LIHTC units. Households composed entirely of full-time students who attend an educational institution are ineligible unless meeting specific statutory exceptions (e.g., work-study employment, married filing jointly).

Deadline: Student status must be verified at lease execution and at each annual recertification

Source: IRC §42(i)(3)(D); 26 CFR 1.42-5; Oregon LIHTC Manual 2025; Multiple state compliance manuals