Low-income housing credit

§ 18. Low-income housing credit. (a) Allowance of credit. A taxpayer subject to tax under article nine-A, twenty-two or thirty-three of this chapter shall be allowed a credit against such tax, pursuant to the provisions referenced in subdivision (d) of this section, with respect to the ownership of eligible low-income buildings for which an eligibility statement has been issued by the commissioner of housing and community renewal. The amount of the credit shall be the credit amount for each such building allocated by such commissioner as provided in article two-A of the public housing law. The credit amount shall be allowed for each of the ten taxable years in the credit period, and any reduction in first-year credit as provided in subdivision two of section twenty-two of such law shall be allowed in the eleventh taxable year.
(b) Credit recapture. (1) General. If,
(A) as of the close of any taxable year in the compliance period, the amount of the qualified basis of any building with respect to the taxpayer is less than
(B) the amount of such basis as of the close of the preceding taxable year,
(C) then the credit recapture amount must be added back for the taxable year.
(2) Credit recapture amount. The credit recapture amount is an amount equal to the sum of
(A) the aggregate decrease in the credits allowed to the taxpayer under this section for all prior taxable years which would have resulted if the accelerated portion of the credit allowable by reason of this section were not allowed for all prior taxable years with respect to the excess of the amount described in subparagraph (B) of paragraph (1) of this subdivision over the amount described in subparagraph (A) of such paragraph, plus
(B) interest at the overpayment rate established under section one thousand ninety-six of this chapter on the amount determined under subparagraph (A) of this paragraph for each prior taxable year for the period beginning on the due date for filing the report for the prior taxable year involved.
(3) Accelerated portion of credit. For purposes of paragraph two of this subdivision, the accelerated portion of the credit for the prior taxable years with respect to any amount of basis is the excess of
(A) the aggregate credit allowed by reason of this section (without regard to this subdivision) for such years with respect to such basis, over
(B) the aggregate credit which would be allowable by reason of this section for such years with respect to such basis if the aggregate credit which would (but for this subdivision) have been allowed for the entire compliance period were allowable ratably over fifteen years.
(4) Special rules. For purposes of this subdivision, the rules of section 42 (j)(4)(B) and (C) of the internal revenue code shall apply in determining the credit recapture amount.
(5) Exceptions to recapture. Recapture under this subdivision shall not apply to a reduction in qualified basis
(A) by reason of a casualty loss, if the commissioner, in consultation with the commissioner of housing and community renewal, determines that such loss is restored by reconstruction or replacement within a reasonable period, or
(B) by reason of a change in floor space devoted to low-income units in a building, if such building remains an eligible low-income building after such change, and if the commissioner, in consultation with the commissioner of housing and community renewal, determines that such change is de minimis, or
(C) by reason of error in complying with low-income eligibility tests referred to in subdivision five of section twenty-one of the public housing law, if the commissioner, in consultation with the commissioner of housing and community renewal, determines that such error is de minimis.
(6) Recapture by partners of a partnership. In the case of ownership of a building or interest therein by a partnership which has thirty-five or more partners, the provisions of section 42(j)(5) of the internal revenue code shall apply to any recapture under this subdivision unless the partnership elects not to have such provisions apply.
(6-a) The taxpayer that originally received the credit shall remain solely liable for all obligations and liabilities imposed on the taxpayer with respect to the credit, none of which shall apply to a party to whom the credit has been subsequently transferred.
(7) (A) The credit recapture required under this subdivision will not apply solely by reason of the disposition of a building or an interest therein if it is reasonably expected that such building will continue to be operated as an eligible low-income building for the remaining compliance period with respect to such building.
(B) Statute of limitations. If a building (or an interest therein) is disposed of during any taxable year and there is any reduction in the qualified basis of such building which results in an increase in tax under this section for such taxable or any subsequent taxable year, then
(i) the statutory period for the assessment of any deficiency with respect to such increase in tax will not expire before the expiration of three years from the date the commissioner of housing and community renewal is notified by the taxpayer (in such manner as the commissioner of housing and community renewal may prescribe) of such reduction in qualified basis, and
(ii) such deficiency may be assessed before the expiration of such three-year period notwithstanding the provisions of any other law or rule of law which would otherwise prevent such assessment.
(c) Construction with public housing law; definitions. The provisions of this section shall be construed in conjunction with the provisions of article two-A of the public housing law. For definitions relating to the low-income housing credit, see section twenty-one of such law.
(d) Cross-references. For application of the credit provided for in this section, see the following provisions of this chapter: