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Quick Guide to Answering IRS Form 8609 Line 8b–Multiple Building Election

Published by Stephan Morgan on Tuesday, February 7, 2023

Journal Cover February 2023   Download PDF

It is not at all uncommon for a development consisting of multiple buildings to be awarded a low-income housing tax credit (LIHTC) allocation. In such a project, each building will receive its own Internal Revenue Service (IRS) Form 8609, Part II of which is to be completed by the building owner/taxpayer.

Unless otherwise elected by the taxpayer on Part II Line 8b of IRS Form 8609, each building will be treated as its own LIHTC development. This affects how the minimum set-aside is determined and how unit transfers will be handled, among other compliance issues.

Dividing a Multiple Building Development

There are three possibilities for dividing a LIHTC development with multiple buildings, as it pertains to various LIHTC compliance purposes. These are as follows:

  1. All buildings may be treated as one single LIHTC development, or building.
  2. Each building may be treated as its own separate building, or development.
  3. The taxpayer could elect to have a combination of 1 and 2 above, where certain buildings are treated as a single development while the others are treated as their own separate developments.

IRS Form 8609 Line 8b–“Yes” vs. “No”

The question asked in Line 8b is simple. It is, “Are you treating this building as part of a multiple building development for purposes of Section 42?” Answering “No” to this question on line 8b means two or more buildings that share the same LIHTC allocation will be viewed in the eyes of the IRS as being two separate developments. Answering “Yes” means that separate buildings in a LIHTC development will be treated as a single multiple-building-development for LIHTC compliance. In addition to answering “Yes” on line 8b of each building’s 8609 that will be grouped, the taxpayer must also attach to the Form 8609 a Line 8b Statement to indicate which buildings are being included the multiple building development.

Line 8b Statement

As mentioned above, when answering “Yes” to line 8b, the taxpayer is required to also attached a statement to the Form 8609. This statement is required to be attached to each Form 8609 where the response to line 8b is “Yes” and must include certain information. This information is as follows:

  • the name and address of the development and each building in the development;
  • the Building Identification Number (BIN) of each building in the development;
  • the aggregate credit dollar amount for the development; and
  • the credit allocated to each building in the development.

Additionally, Under IRC Section 42(g)(7), two or more qualified low-income buildings can be included in a project only if the buildings are located on the same tract of land, are owned by the same person for federal tax purposes, are financed under a common plan of financing and have similarly constructed housing units.

Throughout this article, we assume that the owner checks “yes” on Line 8b, meaning the property is considered to have one single multi-building project. A flowchart summarizing the above information may be found below.

Click to Enlarge


Note 1:

Is your project 100% affordable? Are any buildings within the project less than 100% affordable? Checking “yes” in these situations has the following pros and cons:


Tenants can transfer between buildings without having to complete a new certification. However, please note that tenants in mixed-income projects are not allowed to transfer if household income exceeds 140% of the limit at time of transfer. Tenants in 100% affordable projects can transfer between buildings even if their income exceeds 140% of the limit.


The unit-vacancy rule will apply across the entire project (this is mostly an issue for mixed-income projects). The unit-vacancy rule states that if a low-income unit becomes vacant during the year, reasonable attempts must be made to rent that unit or the next available unit of comparable or smaller size to qualifying tenants before any units of comparable or smaller size in the project are rented to nonqualifying tenants.

Note 2:

Do any of the buildings need other buildings to meet the set-aside test? Checking “no” in these situations will mean each building is its own project, and has the following pros and cons:


Recertifications are not required for 100% affordable buildings.


Tenants will be required to complete a new initial certification when transferring between buildings. Each building will be its own project for compliance monitoring. The state is required to look at a minimum of 20% of units in each building, which could result in more units audited by the state than if the state looked at 20% of the entire project. Also, each building must meet the set-aside on its own.

Note 3:

Do any of the buildings need other buildings to meet the set-aside test? Checking “yes” in these situations has the following pros and cons:


Same as Note 1. Additionally, buildings that do not meet the minimum set-aside on their own can rely on other buildings in service in the same year to meet the minimum set-aside.


Same as Note 1.

Other Notes:

  • Be sure to monitor for the minimum set-aside separately for buildings in service in different years. For example, if some buildings are in service in 2022 and some in 2023, then the buildings that are in service in 2022 must meet the minimum set-aside as a group separately from the buildings that are in service in 2023, unless the buildings in service in 2022 defer the credit period to 2023.
  • You can check “yes” for some buildings (i.e., all 100% affordable buildings) and “no” for other buildings (non-100% affordable buildings). However, if you check “no” for a building, that building must meet the minimum set-aside test on its own.

LIHTC Compliance, Calculation and Other Issues

It is important to understand what it means to answer “No” or “Yes” regarding the impact on various LIHTC compliance issues such as the minimum set-aside, unit transfers and income limits. Please note, these are only a few of the bigger issues to consider and the list below should not be considered a complete summary of all potential consequences a taxpayer might face when answering line 8b.

Minimum Set-Aside

Every LIHTC development must meet the minimum set-aside test. If a property owner divides an LIHTC development into multiple developments (i.e., by selecting “no” on line 8b), then each development must meet the minimum set-aside test on its own. This has the potential to be an issue in mixed income developments.

  • Choosing “yes” on line 8b: Some buildings can be below the minimum set-aside if the entire development (all buildings in the aggregate) meets the minimum set-aside.
  • Choosing “no” on line 8b: Each building must meet the minimum set-aside on its own.


Tenants often request to transfer between buildings. This is especially true during an acquisition/rehabilitation project. In general, the IRS requirements regarding certifications when tenants transfer within and between buildings are as follows:

  • Choosing “yes” on line 8b: A new income certification is not required by the IRS for transfers between buildings. Tenants are allowed to transfer between buildings within the same LIHTC development if the tenants meet the income requirements.
  • Choosing “no” on line 8b:  If a tenant transfers to a different building, the tenant is treated as moving out of one development and moving into a new development and must be income qualified each time they transfer across buildings in separate developments. If each building is a separate development, tenants over the income limit will not be able to transfer between the buildings.

Income Limits

For LIHTC developments, the income limit for any given year can never be less than it was for the development in the previous year. This is commonly called the multifamily tax subsidy development (MTSP) hold-harmless policy. The MTSP hold-harmless policy starts when a development is placed in service and is determined on a development-by-development basis:

  • Choosing “yes” on line 8b: The MTSP hold harmless for the income limit for all buildings in the development is determined by the date the first building was placed in service.
  • Choosing “no” on line 8b: The MTSP hold harmless limit for each building is determined by the date each building was placed in service.

Finally, it is important to note that the election made on IRS Form 8609 Line 8b is irrevocable. While it is true that an election in line 8b may be changed after filing Form 8609, this process will require a private letter ruling, which is an extremely costly, time consuming and lengthy process.


Understanding the ramifications of IRS Form 8609 Line 8b is important for anyone operating, investing in and/or managing a LIHTC development. There are multiple steps involved in making a valid election. Making the election either way can and will have a great impact on the LIHTC compliance of the development or developments moving forward. Experienced consultants and/or tax accountants can help with the understanding of these concepts and consequences, as well as assist with properly completing Part II of IRS Form 8609.

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