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Proposed Changes to LIHTC Program

April 2, 2017

On July 14, 2016, the “Affordable Housing Credit Improvement Act of 2016” was introduced in the Senate by Senators Cantwell, Hatch, and Wyden. It would make a number of changes to the Low-Income Housing Tax Credit (LIHTC) program, including (1)…

GAO Report – The Role of Syndicators in the LIHTC Program – February 16, 2017

March 4, 2017

GAO Report – The Role of Syndicators in the LIHTC Program – February 16, 2017 The Government Accountability Office (GAO) has issued its third and final report on the Low-Income Housing Tax Credit Program (LIHTC). The two prior GAO…

Small Area Fair Market Rents (SAFMRs)

February 26, 2017

Small Area Fair Market Rents (SAFMRs) HUD publishes fair market rents for all areas of the nation. Public Housing Agencies (PHAs) use fair market rents as a guideline when determining payment standards for the Housing Choice Voucher (HCV) program.…

Using PHA Income Verification for Section 8 Voucher Residents on LIHTC Projects

February 12, 2017

IRS Regulation 1.42-5 states that the requirement to verify the income of a low-income resident with a Section 8 voucher at a tax credit property is satisfied “if the public housing authority provides a statement to the building’s owner declaring…

IRS Notice 2016-77 – QAP Preferences Relative to Community Revitilization Plans

January 2, 2017

On December 27, 2016, the IRS issued Notice 2016-77. This Notice relates to the issue of satisfying the required Qualified Allocation Plan (QAP) preference relating to Community Revitalization Plans. Background Section 42 (m) of the Internal Revenue Code (the…

IRS Revenue Ruling 2016-29 – Regarding Qualified Allocation Plan Provisions Relating to Local Approval of LIHTC Allocations

December 29, 2016

This recently issued Revenue Ruling addresses the issue of whether or not Section 42 of the Internal Revenue Code requires or even encourages Housing Finance Agencies (HFAs) to reject proposals for low-income housing tax credit (LIHTC) developments if the locality…

HUD Final Rule on VAWA – November 16, 2016

November 21, 2016

The U.S. Department of Housing & Urban Development (HUD) final rule regarding the implementation of housing protections authorized in the Violence Against Women Reauthorization Act of 2013 (VAWA) was published in the Federal Register on November 16, 2016. In…

Compliance with HUD Live-in Aide Rules

October 10, 2016

Compliance with HUD Live-in Aide Rules Allowing a Live-in Aide for a disabled person is both a HUD and fair housing requirement. The definition of a live-in aide is a person who resides with one or more elderly…

Potential Impact on LIHTC Projects from The Housing Opportunity Through Modernization Act of 2016

July 30, 2016

Potential Impact on LIHTC Projects from The Housing Opportunity Through Modernization Act of 2016 Congress recently passed the Housing Opportunity Through Modernization Act of 2016. While many of the changes brought about by the Act apply only to Public Housing…

Verification of Cash Payments

July 6, 2016

Verification of income from employment is usually just a matter of obtaining a written verification of income from the employer or the most recent four to six consecutive pay stubs from the applicant. However, in some cases, persons are paid…

Child Support Pass-Through and Disregard Policies for Public Assistance Recipients

June 26, 2016

Child Support Pass-Through and Disregard Policies for Public Assistance Recipients Under federal law, families receiving public assistance, known as Temporary Assistance for Needy Families (TANF), must cooperate with child support establishment and enforcement efforts. In addition, TANF recipients…

GAO Issues Second Report on the LIHTC Program, May 2016

June 13, 2016

The United States Government Accountability Office (GAO) recently issued a report to the Senate Judiciary Committee titled “Low-Income Housing Tax Credit – Some Agency Practices Raise Concerns and IRS Could Improve Noncompliance Reporting and Data Collection.” This is the second…

Updated REAC Guidance – May 23, 2016

May 25, 2016

HUD has released a document titled “UPCS Guidance & Protocol Clarification.” This guidance was effective on May 23, 2016, and changes some of the prior guidance inspectors followed during REAC inspections. Primary changes/clarifications are as follows: HUD has clarified that…

Fair Housing Enforcement at LIHTC Properties

April 2, 2016

Fair Housing Enforcement at LIHTC Properties A violation of fair housing law is reportable noncompliance for Low-Income Housing Tax Credit (LIHTC) properties. It is reported on Line 11h of IRS Form 8823, along with any other finding of noncompliance…

HUD Publishes 2016 Income Limits

March 28, 2016

On March 28, 2016, HUD published the 2016 income limits for HUD programs as well as for the Low-Income Housing Tax Credit and Tax-Exempt Bond programs. The limits for the LIHTC and Bond projects are published separately from the limits…

IRS Issues Final and Temporary Regulations Regarding Utility Allowances

March 4, 2016

Utility Allowance Final and Temporary Regulations The IRS published Final and Temporary Regulations relating to Utility Allowances for Low-Income Housing (LIHTC) properties in the March 3, 2016 Federal Register. The final regulations clarify the circumstances in which utility…

IRS Amends State LIHTC Monitoring Requirements

February 25, 2016

Amendments to LIHTC Monitoring Regulation, Revenue Procedure 2016-15 On February 25, 2016, the IRS published a proposed rule in the Federal Register that would amend the compliance monitoring duties of a state or local housing credit agency relative to…

HUD Changes REAC Protocol Regarding Units with Bedbugs

February 7, 2016

On January 21, 2016, HUD issued Inspector Notice No. 2016-01, “UPCS Inspector Protocol Bed Bug Infestation.” The Notice was effective on February 1, 2016, and applies to all properties that are subject to UPCS physical inspections. In states that…

2016 HUD Imputed Interest Rate

January 19, 2016

HUD published Notice 2016-01 on January 19, 2016, announcing that the passbook savings rate effective February 1, 2016, will remain at .06%. The notice applies to all Project-Based Section 8 programs, Section 101 Rent Supplement Program, Section 202 Programs, Section…

Rent to Own vs. Seller Financing

January 15, 2016

The Difference Between “Seller Financing” and “Rent-to-Own” Chapter Five of HUD Handbook 4350.3, Chg. 4 outlines various requirements relative to the determination of value and income for assets. One of the more unusual assets managers of affordable housing developments…

Tax Extenders Signed Into Law

December 19, 2015

Congress has passed and the President has signed the Protecting Americans from Tax Hikes (PATH) Act of 2016. The legislation includes a number of permanent (as opposed to temporary) extensions of expiring tax provisions. Included in these is a permanent…

Computing Adjustments to the Allowable Annual Credit for LIHTC Properties

December 6, 2015

At the conclusion of an audit of a Low-Income Housing Tax Credit (LIHTC) taxpayer, the IRS will determine whether any adjustments to the amount of annual credit are appropriate. This will be done after auditing the eligible basis, applicable…

Amendment to the HUD Definition of Tuition, Notice H 2015-12

December 2, 2015

Amendment to the HUD Definition of Tuition, Notice H 2015-12 HUD published Notice H 2015-12 on November 18, 2015, amending the definition of tuition as it relates to both HUD Multifamily Housing programs and Public and Indian Housing (PIH)…

HUD Notice on Designation of Difficult Development Areas and Qualified Census Tracts for 2016

December 1, 2015

On November 24, 2015, HUD issued a Notice in the Federal Register designating “Difficult Development Areas” (DDAs) and “Qualified Census Tracts” (QCTs) for purposes of the Low-Income Housing Tax Credit Program (LIHTC). For the first time, HUD is using…

Developer Fees – How They are Viewed by the IRS

November 29, 2015

Developer fees represent payment for a developer’s services and are (at least partly) includable in eligible basis for a Low-Income Housing Tax Credit (LIHTC) project. There are three basic types of developer fees. Turnkey Project Fee The…

Understanding the Applicable Percentage for a Section 42 Property

November 28, 2015

The amount of annual Low-Income Housing Tax Credit (LIHTC) a building may receive is dependent on four factors: (1) Eligible Basis; (2) the Applicable Fraction; (3) qualified basis; and (4) the Applicable Percentage. Of these four elements, the “Applicable Percentage”…

The Determination of Qualified Basis for LIHTC Projects

November 27, 2015

The Determination of Qualified Basis for LIHTC Projects Qualified basis is a portion of a low-income building’s eligible basis associated with the low-income units. In simplest terms, it represents the amount of money spent on the construction of a building…

LIHTC Requirements Regarding Common Areas, Required Facilities, and Provision of Services

November 9, 2015

Section 42(d)(4)(B) of the Internal Revenue Code reads: “The adjusted basis of any building shall be determined by taking into account the adjusted basis of property (of a character subject to the allowance for depreciation) used in common areas or…

Eligible Basis: IRS Reconciliation of Allowable Costs

October 24, 2015

During an audit, a primary point of examination by the IRS will be the reconciliation of eligible basis, and identification of large, unusual or questionable items. Reconciliation of Eligible Basis The eligible basis shown on Line 7 of…

Costs Included In Eligible Basis

October 18, 2015

The next few articles in this series of articles on the IRS Audit Guide will focus on the important issue of Eligible Basis, the beginning point for the calculation of credits. This first article will discuss the costs that…

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