Topic: Feature

The Low Income Housing Tax Credit (LIHTC) program is the country’s most extensive affordable housing program. The program was added to Section 42 of the Internal Revenue Code (IRC) in 1986 to provide private owners with an incentive to create and maintain affordable housing. The LIHTC program works through a subsidy mechanism. The Internal Revenue Service (IRS) allocates funds on a per-capita basis to each state. And each state has a housing finance or other agency that assumes responsibility for allocating tax credits to developers.

An owner may hire you to manage tax credit sites in a different state from the one where your current tax credit sites are located. You may think that because the tax credit program is a federal program, you can simply apply the same rules you’re currently complying with to the site in the new state. But that would be a mistake.

The owner of a tax credit site you manage may tell you that the site also gets bonds—that is, participates in the tax-exempt bond program. Owners who get approved for these bonds for their site enjoy a tax-exempt status, which means they get lower interest rates on mortgages. They also don’t have to compete with other owners in your state for tax credits. If you manage such a site, you must know how to comply with both programs’ requirements. If you’re not sure what to do, you risk jeopardizing both the owner’s tax credits and its tax-exempt status.

An owner seeking to evict a resident can’t begin an eviction lawsuit without first legally terminating the tenancy. This means giving the resident written notice, as specified in the state’s termination statute. If the tenant doesn’t move or fix the issue, for example, by paying the rent or finding a new home for an unauthorized occupant, you can then file a lawsuit to evict. State laws set out very detailed requirements to end a tenancy.

To calculate household income for determining whether a household is eligible at a tax credit site, you’re required to follow the rules set out in HUD Handbook 4350.3. Sections 1 and 3 of Chapter 5 of the HUD Handbook (Determining Income and Calculating Rent) set out the rules you must follow for calculating and verifying income. You should ignore Sections 2 and 4 of this chapter. Section 2 doesn’t apply because it concerns adjusted income, which doesn’t come into play when calculating household income at tax credit sites.

Most tax credit managers know that state housing agencies must regularly inspect sites for compliance with the tax credit program. The agencies inspect units to make sure they’re suitable for occupancy and look at household files to make sure they’re accurate and complete. But many managers are confused about what these inspections involve.We’ll tell you the answers to the most commonly asked questions about state housing agency inspections. This way, you can help these inspections go smoothly during your site’s 15-year compliance period.

The Fair Housing Act (FHA) prohibits housing discrimination because of race, color, religion, sex, national origin, familial status, or disability. The law targets discriminatory practices by making it unlawful to deny housing—or discriminate in the terms and conditions of the rental—because of race or other protected characteristic.