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Texas Housing Development Tax Credit
Texas law allows a tax credit based on the state housing credit awarded by the Texas Department of Housing and Community Affairs (TDHCA) to the owner(s) of a qualified development. The credit can be applied to either franchise tax or insurance tax liabilities.
The housing development credit is available for franchise tax reports originally due on or after Jan. 1, 2026, and for annual insurance premium tax reports originally due on or after Jan. 1, 2026. The credit can only be used for insurance premium taxes due under Insurance Code Chapters 221, 222, 223, or 224. The state housing credit is claimed in ten equal installments beginning with the report covering the period in which the development is fully placed in service.
Qualifying for the Credit
To qualify for the credit, you must meet these requirements:
- the entity must be awarded a state housing credit and receive an allocation certificate from TDHCA;
- the entity must have a direct or indirect ownership interest in the qualified development; and
- the credit cannot be claimed until all units in the development have a certificate of occupancy.
Establishing the Credit
To establish the credit, follow these steps:
- Contact TDHCA for information about how to apply for the State Housing Tax Credit. TDHCA will assist you with applying and obtaining an allocation certificate.
- 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;
- the allocation certificate issued by TDHCA; and
- certificates of occupancy for all buildings within the qualified development.
The Comptroller’s office will review your documents and upon approval will mail Form 05-916, Texas Housing Development Credit Certificate, to you. The Texas Housing Development Credit Certificate is proof that you have established a housing development credit and indicates the amount of credit established.
Allocating the Credit
The credit may be allocated to partners, members or shareholders of a pass-through entity. To 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 Form 05-916, Housing Development Credit Certificate.