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As an owner or manager, it’s important to keep your designated low-income units qualified as such under tax credit rules. Unless a site is deep rent skewed, a LIHTC site must have either 20 percent of the units rent-restricted and occupied by a household with income at or below 50 percent of the area median income (AMI), or 40 percent of the units rent-restricted and occupied by a household with income at or below 60 percent of AMI.

When calculating household income at initial certifications and at annual recertifications, if you have a mixed-income site, you must properly count the household’s assets. But this can be tricky if you’re not familiar with HUD’s rules.

If you’re not sure how to count assets correctly, you might reject an eligible household because you mistakenly believe that its members earn too much income. Or you may incorrectly determine that a househol...

The applicable fraction is the percentage of rental units in a building that qualify as low-income units. Specifically, under Internal Revenue Code (IRC) §42(c)(1)(B), the applicable fraction is the smaller of the unit fraction or the floor space fraction. IRC §42(c)(1)(C) defines “unit fraction” as a fraction whose numerator is the number of low-income units in the building, and whose denominator is the number of residential rental units in such b...

As the holiday season approaches, we know that audit season isn’t far behind. Taking steps now to review management practices, household files, and preparing annual forms will help ensure a strong start to the upcoming year and an efficient audit process.

The following is a list of year-end items that owners or managers may review now to ensure deadlines are met and to minimize disruptions to day-to-day operations.

On Nov. 2, House Republicans unveiled a sweeping tax reform legislation called the Tax Cuts and Jobs Act (H.R. 1). It was introduced by Ways and Means Committee Chairman Kevin Brady. Although its provisions are generally in line with the House Republican Blueprint for Tax Reform released in June 2016 by House Speaker Paul Ryan (R-WI), and House Ways and Means Committee Chair Kevin Brady (R-TX), and the tax plan released by President Trump on April 26, 2017, it contains ...

When a qualified low-income household moves out of a unit at your tax credit site, you might not have another qualified household immediately available to move into the unit. And finding qualified households for your site can be difficult and take time. For these reasons, you may have units that have been vacant for a considerable amount of time. Fortunately, the tax credit law lets owners continue to claim credits for units that become vacant, as long as they comply wi...

At this time of year, as the academic year starts, it may be a good time to review student eligibility restrictions for the LIHTC program. You probably know that, in general, you can’t rent a low-income unit at your tax credit site to a household that’s made up of full-time students.

If you’re like many tax credit managers, you might want to set aside a model unit that you can show to prospects to help “sell” your site. But before you set aside any unit at your tax credit site for this purpose, you must consider what effect your action may have on your compliance efforts. Depending on the type of unit you choose to set aside, you could put the owner’s tax credits at risk.

Generally speaking, if you manage a mixed-income site, you and your staff must recertify all low-income households at the site each year. Failing to meet recertification requirements is a leading cause of noncompliance that can cost the owner its tax credits. But recertification can be a time-consuming and burdensome process.

By Carolyn E. Zezima, Esq.