Late set-aside election allowed on an amended Form 8609 for the low-income housing credit

Plain-English summary

The low-income housing credit under § 42 rewards owners who rent a share of their units to lower-income tenants. To qualify, an owner must pick a "minimum set-aside" test on Form 8609, and once made the choice is irrevocable. The owner here meant to elect the "average income" set-aside (the § 42(g)(1)(C) option) and its own contemporaneous records show that intent, but it forgot to mark the election on the Form 8609 it filed. The owner asked the IRS for more time to fix the mistake. The IRS granted a 120-day extension under Treas. Reg. § 301.9100-3 to file an amended Form 8609 making the intended election, finding the owner acted reasonably and in good faith and relief would not prejudice the government. The IRS took no position on whether the project actually qualifies for the credit.

Ruling snapshot

• Question: May a housing project owner get more time to make the § 42(g)(1) minimum set-aside election it inadvertently omitted from Form 8609?
• Outcome: approved (120-day extension to file an amended Form 8609)
• Key authorities: IRC § 42(g)(1); Treas. Reg. §§ 301.9100-1 and 301.9100-3; Treas. Reg. § 1.42-1(h); IRC § 42(l)(1)

Full text (IRS public release)

 Internal Revenue Service                                       Department of the Treasury
                                                                Washington, DC 20224

 Number: 202609015                                              Third Party Communication: None
 Release Date: 2/27/2026                                        Date of Communication: Not Applicable
 Index Number: 9100.01-00, 42.00-00
                                                                Person To Contact:
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 ---------------------------------------------------            Refer Reply To:
 -------------------------                                      CC:ECE:B01
 -------------------------                                      PLR-118742-25
 In Re:                                                         Date:
          ---------------------------------------------------   November 24, 2025




LEGEND

 Taxpayer        = -----------------------------------------------------
                   -----------------------
 State           = -------------
 Year            = -----------------------------------------------------
 BIN             = ------------------
 Address         = -----------------------------------------------------
                   ---------------------------


Dear ---------------:

       This letter responds to your authorized representative's letter, dated September
17, 2025, and subsequent correspondence, submitted on behalf of Taxpayer,
requesting an extension of time, pursuant to §§ 301.9100-1 and 301.9100-3 of the
Procedure and Administration Regulations, to file an amended Form 8609, Low-Income
Housing Credit Allocation and Certification, with respect to the election related to
section 42(g)(1) of the Internal Revenue Code (Code).

       According to the information submitted and representations made, Taxpayer
owns and operates a single-building housing project (Project) in State. The building
was placed in service in Year. Under section 42(f)(1), Taxpayer elected to begin the first
year of the credit period in the succeeding year. The Project consists of one building for
section 42 purposes. The building identification number associated with the Project is
BIN. The Project is located at Address.

      Taxpayer intended, as evidenced by Taxpayer’s contemporaneous documents,
to make the average income minimum set-aside election for the Project. However, on
PLR-118742-25                                  2

the Form 8609 that Taxpayer submitted to the Internal Revenue Service (IRS),
Taxpayer inadvertently failed to make such election.

        Section 42(g)(1) defines the term “qualified low-income housing project” as any
project for residential rental property if the project meets the requirements of section
42(g)(1)(A), (B), or (C), whichever is elected by the taxpayer. The project meets the
requirements of section 42(g)(1)(A) if 20 percent or more of the residential units in the
project are both rent-restricted and occupied by individuals whose income is 50 percent
or less of area median gross income. The project meets the requirements of section
42(g)(1)(B) if 40 percent or more of the residential units in the project are both rent-
restricted and occupied by individuals whose income is 60 percent or less of area
median gross income. The project generally meets the requirements of section
42(g)(1)(C) if 40 percent or more (25 percent or more in the case of a project described
in section 142(d)(6)) of the residential units in the project are both rent restricted and
occupied by individuals whose income does not exceed the imputed income limitation
designated by the taxpayer with respect to the respective unit. Any election under
section 42(g)(1), once made, is irrevocable.

        Section 42(g)(3) provides that, in general, a building shall be treated as a
qualified low-income building only if the project (of which such building is a part) meets
the requirements of section 42(g)(1) not later than the close of the first year of the credit
period for such building.

       Section 301.9100-7T(b) of the temporary Procedure and Administration
Regulations provides, in part, that the election under section 42(g)(1) is to be made in
the certification required to be filed pursuant to section 42(l)(1).

         Section 42(l)(1) describes the requisite certifications with respect to any qualified
low-income building for the first taxable year of the credit period (first-year
certifications). In the case of a failure to make the required certification on the date
prescribed for it, unless it is shown that the failure is due to reasonable cause and not to
willful neglect, no credit is to be allowable by reason of section 42(a) for the building for
any taxable year ending before the certification is made.

       Section 1.42-1(h) of the Income Tax Regulations provides, in part, that, unless
otherwise provided in forms or instructions, a completed Form 8609 (or any successor
form), which contains the first-year certifications, must be filed by the building owner
with the IRS. The instructions to Form 8609 state, in relevant part, that a building owner
must make a one-time submission of Form 8609 to the Low-Income Housing Credit
(LIHC) Unit at the IRS Philadelphia campus (Service Center) no later than the due date
(including extensions) of the first tax return with which the building owner is filing Form
8609-A, Annual Statement for Low-Income Housing Credit.
PLR-118742-25                                 3

       Sections 301.9100-1 through 301-9100-3 provide the standards the
Commissioner will use to determine whether to grant an extension of time to make an
election.

       Section 301.9100-1(b) defines the term “regulatory election” as including an
election whose due date is prescribed by a regulation published in the Federal Register,
or a revenue ruling, revenue procedure, notice, or announcement published in the
Internal Revenue Bulletin.

       Under § 301.9100-1(c), the Commissioner has discretion to grant a reasonable
extension of time under the rules set forth in §§ 301.9100-2 and 301.9100-3 to make a
regulatory election, or a statutory election (but no more than six months except in the
case of a taxpayer who is abroad), under all subtitles of the Code, except E, G, H, and I.

       Section 301.9100-2 provides automatic extensions of time for making certain
elections. Section 301.9100-3 provides extensions of time for making elections that do
not meet the requirements of § 301.9100-2.

       Requests for relief under § 301.9100-3(a) will be granted when the taxpayer
provides evidence to establish that the taxpayer acted reasonably and in good faith, and
that granting relief will not prejudice the interests of the government.

       In the instant case, based solely on the facts submitted and the representations
made, we conclude that the requirements of §§ 301.9100-1 and 301.9100-3 have been
met. Accordingly, Taxpayer is granted an extension of time to make the election under
section 42(g)(1)(C) for the Project by filing within 120 days from the date of this letter an
amended Form 8609 that include the intended election. The amended Form 8609
(along with a copy of this letter) is to be filed with the Philadelphia campus at the
address provided in the instructions to Form 8609.

        Except as specifically set forth above, we express or imply no opinion concerning
the federal tax consequences of the facts described above under any provisions of the
Code or regulations. In particular, we express or imply no opinion on whether the
Project is a qualified low-income housing project and the building in the Project qualifies
for the low-income housing credit under section 42.

      This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) of the
Code provides that it may not be used or cited as precedent.
PLR-118742-25                                              4

      The ruling contained in this letter is based on the information submitted and
representations made by Taxpayer and accompanied by a penalty of perjury statement
executed by an appropriate party. While this office has not verified any of the material
submitted in support of the request for ruling, it is subject to verification on examination.

         In accordance with the Power of Attorney on file with this office, a copy of this
letter is being sent to your authorized representatives.

                                                        Sincerely,

                                                        Associate Chief Counsel
                                                        (Energy, Credits, & Excise Tax)

                                                         /s/ Dillon J. Taylor

                                                 By:
                                                        Dillon J. Taylor
                                                        Senior Technician Reviewer, Branch 1
                                                        Office of Associate Chief Counsel
                                                        (Energy, Credits, & Excise Tax)

Enclosure:
      Copy of this letter for section 6110 purposes

CC:
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