Iowa Administrative Code › Agency 701 - Revenue Department › Title I - Administration › Chapter 42 - Adjustments to Computed Tax and Tax Credits › Rule 701-42.43 - 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				  tax credit is repealed effective January 1, 2015.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
				  16211., 16.212 and
				  42211X. as amended by
				  2014 Iowa Acts, Senate File 2328.