Meet Two Requirements for Charging Parking Lot Fees

Your tax credit site may offer a parking lot or other parking facility where your residents can keep their cars. If you, as a site owner or manager, want to charge residents a parking fee, you must proceed carefully, cautions tax credit consultant Karen A. Graham. Although the tax credit program's requirements don't specifically address parking lot fees, you may trigger noncompliance by charging them, she warns.

We will tell you the two requirements you must meet to charge parking lot fees. And if you are already charging residents fees to use your parking lot, it is not too late to stop charging fees if you determine that the fees are illegal.

Two Requirements

You can charge parking lot fees if you meet both of these requirements:

1. Parking lot isn't included in site's eligible basis. Many parking lots are considered common areas that the owner included in the site's eligible basis. If that's the case at your site, the tax credit law bars you from charging residents fees for their use, says Graham.

Owners determine which parts of their site are included in the eligible basis during the site's development period, Graham explains. If you are not sure whether your parking lot is part of your site's eligible basis, ask the owner or have the owner check with its accountant.

2. Parking lot is optional amenity. If you learn that your parking lot isn't part of your site's eligible basis, you still can't charge a fee unless the parking lot is an optional amenity. In most cases, an on-site parking lot is an optional amenity because residents have other choices for deciding where to park their cars.

But if residents have no choice, because there are no other lots nearby and overnight street parking is illegal in your neighborhood, then your parking lot is probably a necessary amenity and you can't charge a fee. If you are not sure, talk with your attorney or a tax credit consultant before charging fees.

What Fee to Charge

If you meet the above two requirements and can charge a fee, your only restriction on the amount of the fee is what the market demands, says Graham. For instance, if sites in your area charge $50 a month for parking, you can get away with charging this amount. But even if you charge more than neighboring sites charge, you won't trigger noncompliance.

EDITOR'S NOTE: If you don't meet the above two requirements and, therefore, can't charge a parking lot fee, you can increase your low-income households' rent to help cover the cost of maintaining your parking lot—but only to the extent that the rent doesn't exceed the maximum allowable rent, says Graham. If you already charge residents the maximum rents and you increase them to account for parking lot costs, you will bring your site into noncompliance for charging excessive rents.

Insider Source

Karen A. Graham, CPM, HCCP: President, Karen A. Graham Consulting, LLC, 6883 Fox Trot Ct., Liberty Township, OH 45044; (513) 755-7009; kagc@fuse.net.