Current through Register 1531, September 27, 2024
(1)
Placed in Service
Requirement. All buildings in a project must generally be placed in
service, or donated in the case of donation tax credits, in the year in which the
allocation of Massachusetts low-income housing tax credit is made. Notwithstanding
the foregoing sentence:
(a) with respect to a
project that has an allocation of federal low-income housing tax credit, whenever
such project qualifies for a federal carryover allocation under Section 42(h)(1)(E)
or (F) of the Code and the federal regulations thereunder, such project may continue
to be a Qualified Massachusetts Project if the owner of the project enters into a
satisfactory carryover allocation agreement with the Department prior to the end of
the year in which the allocation of credit is made;
(b) with respect to a project for which the
federal low-income housing tax credit is allowable by reason of Section 42(h)(4) of
the Code applicable to buildings financed with tax exempt bonds, such project may
continue to be a Qualified Massachusetts Project if, in the judgment of the
Department, the project would otherwise meet all of the requirements for a federal
carryover allocation under Section 42(h)(1)(E) or (F) of the Code and the federal
regulations thereunder and the owner of the project enters into a satisfactory
carryover allocation agreement with the Department prior to the end of the year in
which the allocation of credit is made; and
(c) with respect to all projects that do not have
an allocation of federal low-income tax credit and for which such credit is not
allowable by reason of Section 42(h)(4) of the Code, such project may continue to be
a Qualified Massachusetts Project if, in the judgment of the Department, the project
would meet the standards and requirements for a federal carryover allocation under
Section 42(h)(1)(E) or (F) of the Code and the regulations thereunder, if, at the
time of the allocation of the Massachusetts low-income tax credit, the project had,
instead, been allocated a federal low-income tax credit, and the owner of the
project enters into a satisfactory carryover allocation agreement with the
Department prior to the end of the year in which the allocation of the Massachusetts
low-income housing tax credit is made. The Department shall provide a form of
Massachusetts carryover allocation agreement for the Massachusetts low-incoming
housing tax credit.
(2)
Timing of Claiming Credit. Any taxpayer holding the right
to claim Massachusetts standard LIHTC with respect to a Qualified Massachusetts
Project may claim a pro rata portion of the annual amount of
Massachusetts standard LIHTC allocated with respect to such project for the calendar
year in which such project first meets the conditions described in
760 CMR
54.08, with proration based on the portion of such
calendar year during which the project meets those conditions. Any amount of annual
standard LIHTC deferred on account of proration may be claimed in the sixth tax
year, assuming the project remains qualified.
(3)
Early Credit
Election. Notwithstanding the generally applicable timing for claiming
Massachusetts standard LIHTC described in 760 CMR 54.09(2), an owner of a Qualified
Massachusetts Project may elect to accelerate the time for claiming the credit.
Provided that the project first meets the conditions described in
760 CMR
54.08, an owner of such Qualified Massachusetts
Project may file a notice with the Commissioner in a form to be determined by the
Commissioner that the owner has elected to accelerate the credit.
(4)
Effect of Early Credit
Election. When an owner of a qualified Massachusetts project receiving
standard LIHTC makes an early credit election in the first year of the credit period
and such project meets the requirements for making such an election, then
notwithstanding 760 CMR 54.09(2), any taxpayer holding the right to claim
Massachusetts low-income housing tax credit with respect to such project shall claim
the taxpayer's share of the project's entire annual allocation of Massachusetts
low-income housing tax credit for the taxable year in which such election is validly
made, without proration or adjustment on account of the date during such year on
which the project is placed in service or on which such election is made, subject to
any other applicable limitations.
(5)
Examples. The following examples illustrate the application
of 760 CMR 54.09.
(a)
Example
1. Assume $100,000 of Massachusetts standard LIHTC is allocated with
respect to a project in 2001. The project is owned by one individual who retains the
right to claim such credit. No Massachusetts carryover allocation agreement under
760 CMR 54.09(1) has been entered into. The individual's tax year coincides with the
calendar year. If the project meets the conditions described in
760 CMR
54.08 and is placed in service on October 1, 2001,
then the individual holding the right to claim such credit may claim $25,000 in
Massachusetts low-income housing tax credit on his or her Massachusetts tax return
for the year 2001 subject to any other applicable limitations. The individual would
be expected to claim $100,000 on his or her Massachusetts tax returns for each of
the years 2002, 2003, 2004, and 2005, and to claim $75,000 on his or her
Massachusetts tax return for the year 2006, assuming the project remains qualified
and the individual retains the right to claim all of the credit.
(b)
Example 2. The same
individual elects to take the early credit option instead of the pro
rata approach. The individual may claim $100,000 in Massachusetts
low-income housing tax credit on his or her tax return for 2001, and $100,000 per
year for each of the subsequent four years.
(c)
Example 3. The same
individual has a tax year that runs from July 1st to June
30th. The individual elects to take the early credit
option. The individual takes the $100,000 credit available on October 1, 2001 in his
or her tax year that ends on June 30, 2002 and $100,000 per year for each of the
taxpayer's subsequent four tax years.
