National Equity Fund

Which Year is Year 15

The 15 year LIHTC compliance period ends on December 31st of the 15th year of the tax credit period, and a sale may occur anytime after that year-end date. Determining the tax credit period is done on a building-by-building basis.

As defined in the Code, the tax credit period commences either in the year the qualified building is placed in service or the year after the building is placed in service. A taxpayer elects to defer the first credit year by checking the “Yes” box on line 10(a) of Form 8609, which is filed with the partnership’s tax return. Often, the first year of the credit period is a partial one for the tax credits.

Although determining the initial tax credit year and consequently the final year of the 15 year compliance period is made on a building-by-building basis, general partners can simplify the disposition process by waiting until all buildings in the project reach the end of their compliance period before selling the project.


A project contains three buildings. The first building was placed in service in 1988 and the subsequent buildings were placed in service in 1989. For all buildings, the “No”; box was checked on line 10(a) of the 8609, indicating that the sponsor did not elect to defer the first tax credit year for any of the buildings. Consequently, the end of the 15 year compliance period for the first building is December 31, 2002, and for the other two buildings is December 31, 2003. The limited partner may require that the partnership retain ownership of all three buildings until at least January 1, 2004, so that all project buildings will have reached at least the beginning of their 16th year by the time of sale.

Rule of Thumb: Determine the first credit year. Add 14 to that year. December 31st of that year marks the end of year 15. The project is eligible to sell without recapture on January 1st of the following year, year 16.