The tax credit law allows low-income units to remain qualified even when a household goes over-income. But to maintain the unit’s low-income status, when a household’s income exceeds 140 percent of the income limit (or 170 percent in deep rent-skewed units), you must follow the next available unit (NAU) rule. To do this, you must rent the next available unit of comparable or smaller size in the same building to a qualified low-income household.
During an inspection, Real Estate Assessment Center (REAC) inspectors look at specific areas of the site for health and safety hazards. Most of these hazards can cost you points on your inspection score but don’t necessarily subject you to other, more serious penalties.
HUD’s Office of General Counsel (OGC) recently issued guidance addressing how refusing to rent or renew a lease based on an individual’s criminal history could violate the Fair Housing Act (FHA). Last year, in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc., the U.S. Supreme Court upheld “disparate impact” liability under the FHA.
On March 3, the IRS and the Treasury Department published amended regulations for utility allowances at LIHTC sites. The two sets of regulations issued help owners use a consumption-based utility allowance at properties that are either submetered or generate and sell energy using onsite renewables. These regulations affect the maximum rent that LIHTC building owners can charge tenants.
One of the biggest concerns owners and managers face is housing tax credit recapture. Under Section 42 of the Internal Revenue Code, low-income housing tax credits are allocated to a site annually over a 10-year period. But these tax credits are subject to a 15-year compliance period. This means, because credits are earned over 15 years and claimed over 10 years, there’s a portion of the credits being claimed in the first 10 years that hasn’t yet been earned. These unearned credits in the first 10 years are referred to as the accelerated portion of the credits.
The Fair Housing Act (FHA) prohibits discrimination against persons with disabilities. The law broadly defines “disability” as a physical or mental impairment that substantially limits one or more major life activities. And fair housing law classifies hearing impairments as disabilities when they substantially limit—that is, prevent or severely restrict—major life activities such as hearing or communicating.
If you’re like most tax credit managers, you probably contact an outside party such as your state housing agency or a tax credit consultant to get guidance when you’re not sure how to handle certain day-to-day management issues. When you get this guidance, it’s a good idea to document what you’ve been told in writing, preferably on a form for that purpose so you don’t omit any key information.
Federal law imposes numerous accessibility requirements that tax credit sites must follow. If your site was designed and constructed after March 13, 1991, you must make your site readily accessible to and usable by people with disabilities. Federal requirements say that all ground-floor and elevator-accessible units (meaning all units in a building with an elevator), public use areas, and common areas must be accessible to people with mobility impairments at first occupancy. The law defines “first occupancy” as a building that has never before been used for any purpose.
The IRS recently released a memo, entitled “Low-Income Housing Credit—Noncompliance Resulting from Conflicting Program,” directed to examiners auditing LIHTC issues. The memo addressed whether a building could continue to qualify as low income under Section 42 of the Internal Revenue Code (IRC) if an owner doesn’t renew a tenant’s lease because the tenant’s increase in income was above the amount allowed under requirements of a local, state, or other federal program.
The IRS recently released a memorandum issued by the Office of Chief Counsel dated June 2, 2014, which addressed circumstances that could affect the eligibility of employee units such as manager or maintenance personnel units in a LIHTC site to qualify for the tax credit. Specifically, the memo discussed the effect of charging rent to resident managers and maintenance personnel and whether, by doing so, those units could be characterized as “residential rental units.”
