Form 8586: Claiming the Low-Income Housing Credit
Published November 8, 2026
Form 8586 is the form for the low-income housing credit. The credit is a general business credit for a new qualified low-income building placed in service after 1986. The IRS says the credit is generally taken over a 10-year credit period.
This post is general information from the IRS form. It does not say whether a particular building or owner qualifies, and it does not give tax advice for a particular taxpayer.
Who files Form 8586
The form is for partnerships, S corporations, estates, and trusts that receive the credit. The instructions say that other taxpayers whose only source of this credit is one of those pass-through entities do not file Form 8586. They report the credit directly on Form 3800, General Business Credit.
The credit reaches the owner through Form 8609-A. Each building has its own Form 8609-A. The owner attaches a copy of each Form 8609-A completed for the tax year to Form 8586. The post on Form 8609: Low-Income Housing Credit Allocation and Certification explains how the allocation and certification work.
The lines that matter
Line 1 is the number of Forms 8609-A attached. Line 2 asks whether the qualified basis of any building decreased since the close of the prior tax year. If the answer is yes, the form asks for the building identification numbers of those buildings.
Line 3 is the current-year credit from the attached Forms 8609-A. Line 4 is the credit from partnerships, S corporations, estates, and trusts. Line 5 adds lines 3 and 4.
The reporting rule for line 5 depends on the filer. Partnerships and S corporations stop at line 5 and report the amount on Schedule K. Other filers report the amount on Form 3800, Part III, line 4d. Estates and trusts use lines 6 and 7 to allocate the credit to beneficiaries first.
Rules the form points to
The credit cannot be more than the amount allocated to the building. The building must be a residential rental building in a low-income housing project that meets one of the minimum set-aside tests. Except for buildings financed with certain tax-exempt bonds, the owner needs an allocation from the housing credit agency before the credit is claimed.
The 15-year compliance period
The form says the building must keep meeting certain requirements during a 15-year compliance period. If the qualified basis drops from one year to the next, part of the credit already taken may need to be recaptured. Line 2 is where that decrease is reported. Recapture is figured on Form 8611, Recapture of Low-Income Housing Credit, when that form applies.
A decrease in qualified basis can also cause a violation of the minimum set-aside requirement. The form says that if that happens, no credit is allowed for that year.
Passive activity rules for estates and trusts
An estate or trust that is subject to the passive activity rules may need to include on line 4 any low-income housing credits from passive activities that were disallowed in prior years and carried forward. The instructions for Form 8582-CR: Passive Activity Credit Limitations explain how to figure the allowed amount.
Keep the records
The form says to keep a copy of Form 8586 and all Forms 8609, 8609-A, and 8611 for 3 years after the 15-year compliance period ends. That period can run for many years, so set a reminder for the end date when the building is placed in service.
Mistakes to avoid
- Filing Form 8586 when the only source of the credit is a pass-through entity. Those taxpayers report on Form 3800.
- Claiming more than the amount allocated to the building.
- Leaving line 2 blank when the qualified basis dropped during the year.
- Throwing away the Forms 8609-A and 8611 before the compliance period ends.
For the allocation and annual statement that support this form, read Form 8609: Low-Income Housing Credit Allocation and Certification.
Check the form and its printed instructions for the tax year you are filing. Use the current revision.
Sources: Sources: IRS, Form 8586, Low-Income Housing Credit (Rev. December 2023) (https://www.irs.gov/pub/irs-pdf/f8586.pdf); the form's general instructions and specific instructions are printed on the form. This is general information, not advice about your specific return.
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