Congressman Introduces LIHTC “Student Rule” Bill for Homeless Veterans and Youths

U.S. House Representative Jim McDermott (D-WA) recently introduced H.R. 3145 to amend Section 42 of the Internal Revenue Code of 1986 as it relates to homeless youth and veterans. The last modification to the student rule occurred in 2008 with the passage of the Housing and Economic Recovery Act, which created a new exemption to make full-time students who were in foster care tax credit eligible.

Currently, the rules governing the Low-Income Housing Tax Credit (LHITC) don’t allow full-time students to qualify as eligible tenants. IRS regulations state that “no dormitory . . . may be a qualified low-income project.” The IRS and Congress’ original intent was to disallow LIHTC housing from being a substitute for a college dormitory.

However, an unintended consequence of this provision is that homeless veterans or youths who wish to pursue full-time education are unable to live in LIHTC housing. H.R. 3145 would revise Section 42 to qualify formerly homeless youths who are students for LIHTC eligibility requirements. This measure, which is similar to a bill that was introduced but never passed in the 112th Congress (H.R. 3076), was referred to the House Committee on Ways and Means.