Tax Credit

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IRS Amends State LIHTC Monitoring Requirements

Amendments to LIHTC Monitoring Regulation, Revenue Procedure 2016-15   On February 25, 2016, the IRS published a proposed rule in the Federal Register that would amend the compliance monitoring duties of a state or local housing credit agency relative to…

HUD Changes REAC Protocol Regarding Units with Bedbugs

On January 21, 2016, HUD issued Inspector Notice No. 2016-01, “UPCS Inspector Protocol Bed Bug Infestation.”   The Notice was effective on February 1, 2016, and applies to all properties that are subject to UPCS physical inspections. In states that…

2016 HUD Imputed Interest Rate

HUD published Notice 2016-01 on January 19, 2016, announcing that the passbook savings rate effective February 1, 2016, will remain at .06%. The notice applies to all Project-Based Section 8 programs, Section 101 Rent Supplement Program, Section 202 Programs, Section…

Rent to Own vs. Seller Financing

The Difference Between “Seller Financing” and “Rent-to-Own”   Chapter Five of HUD Handbook 4350.3, Chg. 4 outlines various requirements relative to the determination of value and income for assets. One of the more unusual assets managers of affordable housing developments…

Tax Extenders Signed Into Law

Congress has passed and the President has signed the Protecting Americans from Tax Hikes (PATH) Act of 2016. The legislation includes a number of permanent (as opposed to temporary) extensions of expiring tax provisions. Included in these is a permanent…

Developer Fees – How They are Viewed by the IRS

  Developer fees represent payment for a developer’s services and are (at least partly) includable in eligible basis for a Low-Income Housing Tax Credit (LIHTC) project. There are three basic types of developer fees.   Turnkey Project Fee   The…

The Determination of Qualified Basis for LIHTC Projects

The Determination of Qualified Basis for LIHTC Projects Qualified basis is a portion of a low-income building’s eligible basis associated with the low-income units. In simplest terms, it represents the amount of money spent on the construction of a building…

Eligible Basis: IRS Reconciliation of Allowable Costs

During an audit, a primary point of examination by the IRS will be the reconciliation of eligible basis, and identification of large, unusual or questionable items.   Reconciliation of Eligible Basis   The eligible basis shown on Line 7 of…

Costs Included In Eligible Basis

  The next few articles in this series of articles on the IRS Audit Guide will focus on the important issue of Eligible Basis, the beginning point for the calculation of credits. This first article will discuss the costs that…

No Increase in 2016 Social Security Rates

The federal government announced today that the Social Security Cost of Living Adjustment (COLA) for 2016 will be zero. This means that there will be no change in the Social Security income of SS recipients for the upcoming year. Owners…

Allocations Under the Nonprofit Set-Aside – IRS Requirements

IRC Section 42(h)(5) requires that a portion of each states annual credit ceiling be set aside for allocation to projects involving qualified nonprofit organizations. Specifically, the Code requires that not more than 90% of the state housing credit ceiling for…

The IRS and Extended Use Agreements

The IRS and Extended Use Agreements   As outlined in §42 (h) (6), all LIHTC properties allocated credits after 1989 must have an extended use agreement (EUA). The agreement is entered into by the taxpayer and the Housing Credit Agency…

Determining the Cash Value of and Income from Annuities

Determining the Cash Value of and Income from Annuities   There is some confusion among managers of affordable rental housing regarding how to determine the value of and income from annuities. Part of the confusion is the result of a…

Section 42 Audit Guide- Techniques Used During Audit

Audit Guide Chapter 3- Techniques Used During Audit   The IRS audit process includes the accumulation of evidence for evaluating the accuracy of a taxpayer’s tax return. Evidence includes taxpayer testimony, books and records, examiner observations, and third party documents.…

GAO Recommends Joint HUD – IRS Oversight of LIHTC Program

Responding to a request from Senator Charles Grassley, Chairman of the Senate Judiciary Committee, the Government Accountability Office (GAO) as performed a review of the oversight and administration of the Low-Income Housing Tax Credit (LIHTC) Program. The results of the…

RAD – Revised Program Notice PIH-2012-32, REV-2

On June 26, 2015, HUD published a Notice in the Federal Register revising some of the rules of the Rental Assistance Demonstration (RAD) Program. HUD’s original notice on the program was published on June 26, 2012. The RAD program provides…

Nonprofit Material Participation Requirements

Section 42 (h) (5) of the Internal Revenue Code requires that Housing Finance Agencies set aside at least ten percent of their annual allocation for use by non-profit entities. This “non-profit pool” is available only to Qualified Nonprofit Organizations and…
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