Iowa Administrative Code › Agency 701 - Revenue Department › Title IV - Individual Income Tax › Chapter 304 - Adjustments to Computed Tax and Tax Credits › Rule 701-304.43 - Disaster Recovery Housing Project Tax Credit

Current through Register Vol. 47, No. 3, July 24, 2024
For tax years beginning on or after January 1, 2011, but
				  before January 1, 2015, a disaster recovery housing project tax credit is
				  available for individual income tax. The credit is equal to 75 percent of the
				  taxpayer's qualifying investment in a disaster recovery housing project, and is
				  administered by the Iowa finance authority. Qualifying investments are costs
				  incurred on or after May 12, 2009, and prior to July 1, 2010, related to a
				  disaster recovery housing project. Eligible properties must have applied for
				  and received an allocation of federal low-income housing tax credits under
				  Section 42 of the Internal Revenue Code to be eligible for the tax credit. The
				  tax credit is repealed effective January 1, 2015.
(1)
Issuance of tax credit
				certificates.
Upon completion of the project and verification of the
				amount of investment made in the disaster recovery housing project, the Iowa
				finance authority will issue a tax credit certificate to the taxpayer. The tax
				credit certificate shall include the taxpayer's name, address, tax
				identification number, amount of credit, and the tax year for which the credit
				may be claimed. The tax credit certificates will be issued on a first-come,
				first-served basis. The tax credit cannot be transferred to any person or
				entity.
(2)
Limitation of
				tax credits.
The tax credit shall not exceed 75 percent of the
				taxpayer's qualifying investment in a disaster recovery housing project. The
				maximum amount of tax credits issued by the Iowa finance authority shall not
				exceed $3 million in each of the five consecutive years beginning in the 2011
				calendar year. A tax credit certificate shall be issued by the Iowa finance
				authority for each year that the credit can be claimed.
(3)
Claiming the tax credit.
The amount of the tax credit earned by the taxpayer will be divided by five and
				an amount equal thereto will be claimed on the Iowa individual income tax
				return commencing with the tax year beginning on or after January 1, 2011. A
				taxpayer is not entitled to a refund of the excess tax for any tax credit in
				excess of the tax liability, and also is not entitled to carry forward any
				excess credit to a subsequent tax year.
If the taxpayer is a partnership, limited liability company,
				  S corporation, or an estate or trust electing to have the income taxed directly
				  to the individual, an individual may claim the credit. The amount claimed by an
				  individual must be based on the individual's pro rata share of the individual's
				  earnings of the partnership, limited liability company, S corporation, or
				  estate or trust.
The increase in the basis of the property that would
				  otherwise result from the disaster recovery housing investment shall be reduced
				  by the amount of the tax credit allowed.
EXAMPLE: An individual whose tax year ends on December 31
				  incurs $100,000 of costs related to an eligible disaster recovery housing
				  project. The taxpayer receives a tax credit of $75,000, and $15,000 of credit
				  can be claimed on each Iowa individual income tax return for the periods ending
				  December 31, 2011, through December 31, 2015. If the tax liability for the
				  individual for the period ending December 31, 2011, is $10,000, the credit is
				  limited to $10,000, and the remaining $5,000 credit cannot be used. If the tax
				  liability for the individual for the period ending December 31, 2012, is
				  $25,000, the credit is limited to $15,000, and the remaining $5,000 credit from
				  2011 cannot be used to reduce the tax for 2012.
(4)
Potential recapture of tax
				credits.
If the taxpayer fails to comply with the eligibility
				requirements of the project or violates local zoning and construction
				ordinances, the Iowa finance authority can void the tax credit and the
				department of revenue shall seek recovery of the value of any tax credit
				claimed on an individual income tax return.
This rule is intended to implement Iowa Code sections
				  16.211,
				  16.212 and
				  422.11X as amended by 2014 Iowa
				  Acts, Senate File 2328.