Compliance

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When you verify a household’s income with employers or other verification sources, you may get information that contradicts what household members told you during the household’s certification or annual recertification. For instance, a household member may tell you that he gets $50 per month in disability payments. But when you verify those payments with the government, you may learn that the member actually gets $65 per month.

You may want to keep a unit at your tax credit site available as a model to show prospects. But you should be careful about which unit you choose to set aside as your model, and what you do with that unit as occupancy changes occur.

The IRS recently released its new audit technique guide (ATG) for IRC Section 42, Low-Income Housing Credit. The purpose of the ATG is to help IRS examiners audit owners of LIHTC projects. It’s organized in the order an examiner might address issues during an examination, starting with an overview of the credit and how to complete a precontact analysis through calculating an adjustment to the credit and writing the audit report. Two related topics, auditing partne...

Commercial space isn’t LIHTC basis eligible, but the IRS Code does allow for commercial use at a tax credit site. That commercial space may even be located in the same building where your low-income households live. For example, suppose a 50-unit tax credit building proposes that the entire first floor, except for the lobby to the residential elevators, be set aside for office space, retail shops, and a drug store. This would be acceptable. But the commercial spac...

Many contractors and maintenance workers who have been on the job for years believe they know all about the dangers of and the precautions necessary for working with lead paint. Others think lead paint poisoning simply went away years ago. It didn’t.

Tax credit sites tend to operate on tight margins because of the competition to obtain these credits initially and the allocating agencies’ obligation to provide the minimum amount of credit necessary to make a deal feasible. Given these constraints, it’s no surprise that some sites, by the time they've reached the end of their compliance period, have fallen into financial distress. Common reasons include poor property management practices, inadequate fi...

If applicants fail to meet your tax credit site’s eligibility requirements or if they can’t pass your site’s screening criteria, you don’t want them arguing with you over the rejection, or worse, filing a fair housing complaint. But that can happen if you leave it to your staff to write up the reasons for a rejection each time they send out a rejection letter.

As we wind down 2013 and prepare for a new year, the Insider looks back and reviews the major events and changes that affected the low-income housing tax credit (LIHTC) industry:

It’s not unusual for tax credit sites to be mixed-income, consisting of both low-income and market-rate units. Market-rate units aren’t rent-restricted and may be rented to households of any income. Even so, certain provisions of the tax credit law apply to those units. If you don’t keep those units in compliance with the tax credit law, you’ll risk bringing your entire site into noncompliance.

Here are five rules to help keep your market-r...

Sometimes tax credit site owners aren’t entitled to claim all the credits they were allocated for a building. This happens when owners don’t lease up as many units to qualified low-income households as they must in the first year of the building’s compliance period. As a result, the building’s first-year “fraction,” which reflects the percentage of the building that’s leased to qualified low-income households, falls short of the...