Cat. No. 63987I

OMB No. 1545-0984 Form 8586 Low-Income Housing Credit

Department of the Treasury

Internal Revenue Service

Attachment

Sequence No. 36a

© Attach to your tax return.

Name(s) shown on return Identifying number

1 Number of Forms 8609-A attached ©

2

3 3

Has there been a decrease in the qualified basis of any buildings since the close of the preceding 

tax year? Yes No If “Yes,” enter the building identification numbers (BINs) of the 

buildings that had a decreased basis. If you need more space, attach a schedule.

(i) (ii) (iii) (iv)

Current year credit from attached Form(s) 8609-A (see instructions) 

4

5

4

6

5

Form 8586 (Rev. 12-2006)

7

6

For Paperwork Reduction Act Notice, see back of form.

(99)

(Rev. December 2006)

Low-income housing credit from partnerships, S corporations, estates, and trusts 

Add lines 3 and 4. Estates and trusts, go to line 6; partnerships and S corporations, report this 

amount on Schedule K; all others, report this amount on the applicable line of Form 3800 (e.g., 

line 1e of the 2006 Form 3800) 

Amount allocated to beneficiaries of the estate or trust (see instructions) 

Estates and trusts. Subtract line 6 from line 5. Report this amount on the applicable line of

Form 3800 (e.g., line 1e of the 2006 Form 3800) 7

Qualified Low-Income Housing Project

Except for buildings financed with certain

tax-exempt bonds, you may not take a low-income

housing credit on a building if it has not received an

allocation from the housing credit agency. No

allocation is needed when 50% or more of the

aggregate basis of the building and the land on which

the building is located is financed with certain

tax-exempt bonds issued after 1989 for buildings

placed in service after 1989. The owner still must get a

Form 8609 from the appropriate housing credit agency

(with the applicable items completed, including an

assigned BIN). “Land on which the building is located” 

includes only land that is functionally related and

subordinate to the qualified low-income building (see

Regulations sections 1.103-8(a)(3) and 1.103-8(b)(4)(iii)).

Recapture of Credit

The low-income housing credit can only be claimed

for residential rental buildings in low-income housing

projects that meet one of the minimum set-aside tests.

For details, see the instructions for Form 8609, Part II,

line 10c.

There is a 15-year compliance period during which the

residential rental building must continue to meet

certain requirements. If, as of the close of any tax year

in this period, there is a reduction in the qualified basis

of the building from the previous year, you may have

to recapture a part of the credit you have taken.

Similarly, you may have to recapture part of the credits

taken in previous years upon certain dispositions of the

building or interests therein. If you must recapture

credits, use Form 8611, Recapture of Low-Income

Housing Credit. See section 42(j) for details.

Section references are to the Internal Revenue Code

unless otherwise noted.

General Instructions

What’s New

● The tax liability limit is no longer figured on this form;

instead, it must be figured on Form 3800, General

Business Credit.

Purpose of Form

Use Form 8586 to claim the low-income housing

credit. This general business credit is allowed for each

new qualified low-income building placed in service

after 1986. Generally, it is taken over a 10-year credit

period.

● Taxpayers that are not partnerships, S corporations,

estates, or trusts, and whose only source of this credit

is from those pass-through entities, are not required to

complete or file this form. Instead, they can report this

credit directly on line 1e of Form 3800.

● The IRS will revise this December 2006 version of

the form only when necessary. Continue to use this

version for tax years beginning after 2005 until a new

revision is issued.

Recordkeeping

Keep a copy of this Form 8586 together with all Forms

8609, Schedules A (Form 8609) (and successor Forms

8609-A), and Forms 8611 for 3 years after the 15-year

compliance period ends.

The credit cannot exceed the amount allocated to the

building. See section 42(h)(1) for details.
Form 8586 (Rev. 12-2006) Page 2

Specific Instructions

Line 2. A decrease in qualified basis will result in

recapture if the qualified basis at the close of the tax

year is less than the qualified basis at the close of the

first year of the credit period.

Line 3. The credit for the year is figured on Form

8609-A for each building. Attach a copy of each Form

8609-A you completed for the tax year to Form 8586.

Enter on line 3 the total credit from attached Form(s)

8609-A.

If you have comments concerning the accuracy of

these time estimates or suggestions for making this

form simpler, we would be happy to hear from you.

See the instructions for the tax return with which this

form is filed.

If the reduction in qualified basis at the close of the

tax year also results in a violation of the minimum

set-aside requirement, then no credit is allowable for

the year.

Paperwork Reduction Act Notice. We ask for the

information on this form to carry out the Internal

Revenue laws of the United States. You are required to

give us the information. We need it to ensure that you

are complying with these laws and to allow us to figure

and collect the right amount of tax.

The time needed to complete and file this form will

vary depending on individual circumstances. The

estimated burden for individual taxpayers filing this

form is approved under OMB control number

1545-0074 and is included in the estimates shown in

the instructions for their individual income tax return.

The estimated burden for all other taxpayers who file

this form is: Recordkeeping, 5 hr., 44 min.; Learning

about the law or the form, 1 hr., 37 min.; Preparing

the form, 3 hr., 39 min.; Copying, assembling, and

sending the form to the IRS, 32 min.

You are not required to provide the information

requested on a form that is subject to the Paperwork

Reduction Act unless the form displays a valid OMB

control number. Books or records relating to a form or

its instructions must be retained as long as their

contents may become material in the administration of

any Internal Revenue law. Generally, tax returns and

return information are confidential, as required by

section 6103.

Line 6. Allocate the amount on line 5 between the

estate and trust and the beneficiaries in proportion to

the income allocable to each. On line 6, enter the

beneficiaries allocated amount.