Texas Housing Development Credit Frequently Asked Questions

The Texas Housing Development Credit (Housing Credit) is a means of directing private capital toward the development and preservation of affordable rental housing for low-income households. Tax credits are awarded to eligible participants to offset a portion of their state tax liability in exchange for the production or preservation of affordable rental housing.

Entities must first apply for the Housing Credit through the Texas Department of Housing and Community Affairs (TDHCA). If TDHCA awards a Housing Credit, it will issue an allocation certificate to the owner(s) of the qualified development.

If you are awarded the Housing Credit from TDHCA, you should mail the following documents to the Texas Comptroller of Public Accounts, P.O. Box 149348, Austin, TX, 78714-9348:

• a completed Form AP-237, Texas Housing Development Credit Registration; and
• the allocation certificate issued by TDHCA.

The Comptroller’s office will review your documents and upon approval, will mail to you Form 05-916, Texas Housing Development Credit Certificate.

Franchise Tax

• Form 05-185, Texas Housing Development Credit Supplement for Credit Claimed on the Franchise Tax Report
• Form 05-181, Texas Franchise Tax Credits Summary Schedule
• Form 05-916, Texas Housing Development Credit Certificate – The Comptroller’s office will mail this form to you upon approval of the credit or after processing an allocation of the credit.

Insurance Premium Tax

• Form 25-126, Texas Housing Development Credit Supplement for Credit Claimed on the Insurance Premium Tax Report
• Form 05-916, Texas Housing Development Credit Certificate – The Comptroller’s office will mail this form to you upon approval of the credit or after processing an allocation of the credit.

Please note that the Housing Credit will be applied after all other available tax credits.

If all other requirements are met, you may claim the credit in 10 equal installments beginning with the tax report that is due in the calendar year after the calendar year the development is placed in service. All buildings within a qualified development must be placed in service before the credit can be claimed.

Franchise tax reports due May 15, 2026, and insurance tax reports due March 1, 2026 are the first reports on which you may claim a Housing Credit.

Yes, if you are a franchise taxpayer. An insurance premium taxpayer may not claim a credit that it has not yet established. To establish and claim the credit you must send these documents with the tax report:

• Form 05-181, Texas Franchise Tax Credits Summary Schedule
• Form AP-237, Texas Housing Development Credit Registration
• the Certificate of Eligibility issued by the Texas Department of Housing Authority and Community Affairs

Please note: You must still file your tax report electronically if required to do so, and you must mail the required forms to the Comptroller’s office in order to claim the credit.

The Housing Credit may not be sold or assigned; however, it can be allocated to partners, members, or shareholders of a pass-through entity. If you allocate the credit , you must submit Form 05-186, Texas Allocation of Housing Development Credit, to the Comptroller’s office with the credit owner’s Housing Development Credit Certificate, Form 05-916.

The entity cannot claim the credit on a report until it has received Form 05-916, Texas Housing Development Credit Certificate, from the Comptroller’s office. After receiving and processing the required documentation, the Comptroller’s office will send each credit owner with a credit balance a new Texas Housing Development Credit Certificate reflecting its new credit balance.

The total credit you can claim on a report may not exceed the amount of tax due for the report after any other applicable credits. If the credit exceeds the tax due, you may carry the unused credit forward for 10 consecutive tax reports or carry it back for 3 consecutive reports. The allocation of a credit does not extend the period for which the credit can be carried forward and does not increase the total amount of credit that may be claimed.

The credit cannot be carried forward to reports due after Dec. 31, 2035, and cannot be carried back to a report due prior to Jan. 1, 2026.