Form DTF-626: Recapture of Low-Income Housing Credit (2026)

Q: How much income can be excluded on IT-221?

You may exclude up to <b>$5,000 ($10,000 for joint filers)</b> of qualifying disability income, reduced by any NY pension or annuity exclusion previously claimed.

Q: Are HSA contributions deductible for New York tax?

No—unlike the federal system, New York does <b>not</b> allow an HSA deduction.

Last reviewed: 2025-10-29

Use the New York Tax Form Calculator Form DTF-626 — Recapture of Low-Income Housing Credit as a stand alone tax form calculator to quickly calculate specific amounts for your 2026 New York state tax return. Alternatively, you can use one of our Combined Federal and State Tax Estimators to quickly calculate your salary, tax, and take-home pay.

Form DTF-626 must be filed when a building previously certified under the New York State low-income housing credit (SLIHC) program no longer meets the eligibility criteria or experiences a reduction in qualified basis during its compliance period. The form computes the amount of credit claimed in prior years that must be recaptured and added back to the owner’s tax liability.

The recapture obligations apply to owners, transferees, partnerships, S-corporations, trusts or estates that claimed credit using Form DTF-624 and subsequently face a decrease in qualified basis, a violation of low-income unit set-aside or other qualifying event. Accurate early filing helps mitigate penalties and interest.

When recapture is required: You must file DTF-626 if the qualified basis of the building decreases from one year to the next, the building fails to meet the low-income set-aside requirements under PHL Article 2-A or IRC §42, you dispose of an ownership interest subject to §42(j)(5) or there is a casualty loss that reduces eligibility.
Who must file: The building owner or transferee who claimed the credit in previous years is liable. Flow-through entities must ensure the credit recapture passes to partners or shareholders as required.
Computation steps: DTF-626 Part 2 requires you to enter the total credits claimed for the building in prior years (line 1), subtract credits attributable to additions to basis (line 2), and compute the portion subject to recapture (line 3).
Submission and payment: File a separate DTF-626 for each building impacted, attach to your tax return for the year the disqualifying event occurred, and pay any additional tax resulting from the recapture as prescribed in the instructions.
Record-keeping: Retain all relevant forms (DTF-625, DTF-625-ATT, DTF-624, DTF-626) and documentation for three years after the 15-year compliance period ends.

Recapture of Low-Income Housing Credit
Part 2
Note: If recapture is passed through from a flow-through entity (partnership, New York S corporation, estate, or trust), skip lines 1 through 7 and go to line 8.
1	Enter total credits reported on Form DTF-624 in prior years for this building (see instructions)	1
2	Credits included on line 1 attributable to additions to qualified basis (see Line 2 Worksheet on back)	2
3	Credits subject to recapture (subtract line 2 from line 1)	3
4	Credit recapture percentage (see instructions)	4
5	Accelerated portion of credit (multiply line 3 by line 4)	5
6	Percentage decrease in qualified basis (see instructions)	6
7	Amount of accelerated portion recaptured (multiply line 5 by line 6; see instructions if prior recapture on building). IRC section 42(j)(5) partnerships, go to line 16. All other flow-through entities (except electing large partnerships), enter the result here and on the appropriate line of Form IT-204 or Form CT-34-SH, as applicable. Generally, flow-through entities other than electing large partnerships will stop here. (Note: An estate or trust enters on line 8 only its share of recapture amount attributable to the credit amount reported on its Form DTF-624.)	7
8	Enter recapture amount from flow-through entity	8
9	Enter unused portion of the accelerated amount from line 7 (see instructions)	9
10	Net recapture (subtract line 9 from line 7 or line 8; if less than zero, leave blank)	10
11	Enter interest on the line 10 recapture amount (see instructions).	11
12	Total amount subject to recapture (add lines 10 and 11)	12
13	Unused credits attributable to this building, reduced by the accelerated portion included on line 9 (see instructions)	13
14	Recapture tax (subtract line 13 from line 12; if zero or less, leave blank). Enter result here and on the appropriate line of the applicable form (see instructions). If more than one Form DTF-626 is filed, add the line 14 amounts and enter the total on the appropriate line of the applicable form. Electing large partnerships, see instructions	14
15	Carryover of the low-income housing credit attributable to this building (subtract line 12 from line 13; if zero or less, leave blank; see instructions)	15
Part 3 – Only IRC section 42(j)(5) partnerships need to complete lines 16 and 17
16	Enter interest on the line 7 recapture amount (see instructions)	16
17	Total recapture (add lines 7 and 16; see instructions)	17
Line 2 Worksheet
(See line 2 instructions before completing.)
a	Enter the amount from Form DTF-625-ATT, line 10	a
b	Multiply line a by	b
c	Enter the amount from Form DTF-625-ATT, line 11	c
d	Subtract line c from line b	d
e	Enter decimal amount figured in Form DTF-625-ATT-I, line 15, step 1 (if line 15 does not apply to you, enter 0)	e
f	Multiply line d by line e	f
g	Subtract line f from line d	g
h	Divide Form DTF-625-ATT, line 17, by Form DTF-625-ATT, line 16; enter result here	h
i	Multiply line g by line h; enter this amount on Part 2, line 2 (if more than one Line 2 Worksheet is completed, add the amounts on line i from all worksheets and enter the total on line 2)	i
Line 9 Worksheet
j	Total of unused carryover from previous tax year(s) included in this Form DTF-626, line 3	j
k	Credit recapture percentage from Form DTF-626, line 4	k
l	Accelerated portion of unused carryover attributable to this building (multiply line j by line k)	l
m	Percentage decrease in qualified basis from Form DTF-626, line 6	m
n	Multiply line l by line m; also enter this amount on line 9	n

Detailed Analysis and Practical Example

Suppose you claimed $100,000 cumulative low-income housing credit for Building A over prior years. In the current year a change reduced the qualified basis by 20 %. You determined that credits from basis additions were $5,000 (line 2). Your recapture pool = $100,000 − $5,000 = $95,000 (line 3). You must report that amount on DTF-626 and include it in your tax liability for the year of the event.

If the event is a partial interest disposal, you must determine the ownership percentage disposed, compute the affected portion of basis reduction and apply recapture accordingly. Failure to correctly allocate can trigger penalties and interest from the New York State Department of Taxation and Finance.

Credit recapture may also apply when the building fails to comply with the minimum low-income tenant or rent restrictions at any time during the credit or recapture period. Auditors focus on lease audits, unit income certifications and occupancy ratios when reviewing such events.

Even when a recapture event occurs in a future year, owners need to monitor the impact on unused credits, carry-forwards and overall tax-planning. Early notice of basis reductions, ownership changes or set-aside failures allows strategic timing of recapture inclusion and minimises adverse tax adjustments.

Flow-through entities must pass the recapture obligation to underlying owners. For example, a partnership owning a qualified building must report DTF-626 information and ensure partners receive K-1’s reflecting their share of recapture, which they then attach to their personal returns.

Last reviewed: 2025-10-29: If you believe this form requires an update, please contact us.

Audit Defence & Forward Planning

Maintain an audit packet containing the original allocation (DTF-625), annual statements (DTF-625-ATT), building ownership changes, basis schedules and tenant compliance reports. Without this supporting file the Department may impose full recapture and penalties.

Before disposing any interest in a low-income housing building subject to the SLIHC program, consider the potential recapture exposure. Perform a pre-closing review with tax and legal counsel to identify and mitigate recapture triggers (e.g., basis reduction, transfer within the recapture period, lease violations).

For transferee-structures where credits are sold or transferred, confirm the building has remained compliant throughout both owner and transferee periods. Credit recapture by a prior owner may affect transferee claims if the events occurred during their period or prior-owner period. Ensure your acquisition agreement addresses recapture liability clearly.

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Frequently Asked Questions

Does IT-203-ATT replace IT-112-R or IT-112-C?

No. Those forms calculate credits for taxes paid to other jurisdictions, and their totals are then entered onto IT-203-ATT where indicated.

How much income can be excluded on IT-221?

You may exclude up to $5,000 ($10,000 for joint filers) of qualifying disability income, reduced by any NY pension or annuity exclusion previously claimed.

Can part-owners of a property claim IT-119?

Yes — if the notice issued reflects the property key and entity ownership, each owner must enter their share of the underpayment on IT-119 and may attach separate forms as required.

Can I use IT-203-B to claim the NY College Tuition Deduction?

Yes. Part 2 of IT-203-B calculates the allowable college tuition itemized deduction or credit, depending on your AGI and tuition amounts paid.

Are HSA contributions deductible for New York tax?

No—unlike the federal system, New York does not allow an HSA deduction.

Important Notes

All calculations are estimates for guidance only. Always review your return and consider professional advice when submitting official filings.