Nebraska Affordable Housing Tax Credit
This guidance document is advisory in nature but is binding on the Nebraska Department of Revenue (DOR) until amended. A guidance document does not include internal procedural documents that only affect the internal operations of the DOR and does not impose additional requirements or penalties on regulated parties or include confidential information or rules and regulations made in accordance with the Administrative Procedure Act. If you believe that this guidance document imposes additional requirements or penalties on regulated parties, you may request a review of the document.
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Affordable Housing Tax Credit Act
The Affordable Housing Tax Credit Act (LB 884 ; LB 217 ; Neb. Rev. Stat. 77-2501 et seq.) (AHTC Act) created a Nebraska state tax credit (AHTC) for developing affordable housing modeled after the federal low-income housing tax credit (LIHTC) provided in Section 42 of the Internal Revenue Code (IRC). The Nebraska Investment Finance Authority (NIFA) and the Nebraska Department of Revenue (DOR) are charged with allocating AHTCs and administering the AHTC Act.
The AHTC Act allows individuals, corporations, financial institutions, and insurance companies to claim nonrefundable tax credits. A qualified taxpayer may use the credits to offset income tax, the premium and related retaliatory tax imposed on insurance companies, and the franchise tax imposed on financial institutions.
Summary of the Application and Tax Credit Allocation Process
- The owner of an affordable housing project must file a LIHTC, AHTC, HOME, and National Housing Trust Fund Application online (LIHTC Application) and remit the appropriate filing fees. NIFA has posted the LIHTC Application on its website.
- NIFA will review the LIHTC Application. Any applicant that receives an allocation of the 9% LIHTC will also receive an allocation of AHTCs. NIFA will not award a particular project any combined amount of LIHTC and AHTC that is more than necessary to make the qualified project financially feasible.
- NIFA will issue a Nebraska Affordability Housing Tax Credit Eligibility Statement, Form 8609N, to the project owner after an approved qualified project building is placed in service. The project owner is required to attach a copy of the Form 8609N to its Nebraska tax return.
You may find the LIHTC Application and additional information on the LIHTC and AHTC programs at NIFA.org.
Allocation, Transfer, Sale, or Assignment of AHTCs
A project owner that is a partnership, limited liability company, or an S corporation, may allocate the AHTCs to some or all of its partners, members, or shareholders based on any agreement among those persons. Project owner means a flow-through entity with a direct or indirect ownership in the qualified project (building).
A qualified taxpayer (defined in the AHTC Act to mean a taxpayer owning an interest, direct or indirect, in a qualified project) may transfer, sell, or assign all or part of its interest in the development, including its interest in the AHTC. A qualified taxpayer cannot transfer, sell, or assign its interest in the AHTC separately from its interest in the qualified project.
Any person or entity allocating, transferring, selling, or assigning AHTCs (transferor) must file a Notice of Allocation, Transfer, Sale, or Assignment of Nebraska Affordable Housing Tax Credits (AHTC Notice) with DOR to report its allocation, transfer, sale, or assignment of AHTCs. The transferor must file the AHTC Notice at least 30 days prior to any qualified taxpayer claiming the related credits. DOR will not allow any AHTCs to offset a qualified taxpayer’s tax liability until it has received the appropriate AHTC Notices.
Qualified taxpayers may claim AHTCs for taxable years beginning or deemed to begin on or after January 1, 2019. Any credit claimed, but not used may be carried over until used. A qualified taxpayer may use the AHTC to offset its income tax, financial institution tax, or premium tax liability.
A qualified taxpayer may claim AHTCs for a period of six years specifically, the first six years of the “credit period” as defined in Section 42 of the IRC. For example, if an owner of a qualifying development receives an annual allocation of $250,000 of LIHTCs and an annual allocation of $250,000 of AHTCs, these credits would be available (subject to applicable provisions of the IRC and the AHTC Act), as follows:
Total Amount of Credit
LIHTC (federal credit)
$250,000 annual allocation
AHTC (Nebraska credit)
$250,000 annual allocation
Beginning in 2019, the first year the AHTC may be claimed, if a qualified development is not fully occupied for the entire first year of the credit period, the AHTC will be limited to the federal LIHTC amount allowed in the first year of the credit period. Pursuant to the rules applicable to the federal LIHTC, the amount of AHTC reduction in year one of the credit period may be claimed in year seven of the credit period.
The project owner must submit a copy of Form 8609N and a copy of the completed Low-Income Housing Credit Allocation and Certification, Form 8609 with its Nebraska income tax return.
Any qualified taxpayer claiming AHTCs must complete and attach a Nebraska Incentives Credit Computation for Tax Years After 2018, Form 3800N, to its Nebraska income tax, financial institution tax, or premium tax return.
A qualified taxpayer cannot use AHTCs in any tax year prior to the year the qualified taxpayer obtained an ownership interest in the project.
Recapture of AHTCs
DOR may recapture AHTCs in proportion to the percentage of recapture or disallowance of the related federal LIHTCs. DOR will recapture the AHTCs from the qualified taxpayer that claimed the AHTCs.
Questions regarding the Affordable Housing Tax Credit Act may be directed to:
Revenue Tax Specialist, Policy Section
Nebraska Department of Revenue
301 Centennial Mall South
PO Box 94818
Lincoln, NE 68509-4818
Phone: 402-471-5814 Fax: 402-471-5946