7803 / When can the low-income housing tax credit be claimed?

The 10-year credit period generally begins in the taxable year in which the building is placed in service, or upon the irrevocable election of the taxpayer, in the succeeding taxable year, but only if the building is a qualified low-income building at the close of the first year of the credit period.¹ However, for post-1987 credit allocations, the taxpayer may begin claiming the credit in either of the next two years, so long as the taxpayer has incurred at least 10 percent of the total project costs in that year.² The credit stays constant throughout the 10-year period in which the credit may be claimed. Thus, if a 2.60 percent credit was taken in 2025 for property placed in service in 2025, a 2.60 percent credit may also be taken in years 2026 through 2034 (assuming the low-income housing remains qualified, see “Qualification of Low-income Housing,” Q 7804).³ For details as to how the election is made under IRC Section 42(f)(1) to defer the start of the credit period, see Revenue Ruling 91-38, Q 7802. Further, temporary relief may be granted for buildings located in federally declared disaster areas.⁴