N.Y. Tax Law § 18: 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:

(1) Article 9-A: Section 210-B: subdivision 15,

(2) Article 22: Section 606: subsections (i) and (x),

(3) Article 33: Section 1511: subdivision (n).