Empty Unit vs. Vacant Unit
An “empty unit” is a unit that has never been occupied. A “vacant unit” is a qualified low-income unit that's no longer occupied.
It's natural to think that these terms refer to the same concept, since they're normally synonymous, admits tax credit expert A.J. Johnson. But under the tax credit law they have special meanings.
Potential danger. If you don't know which of your unoccupied units are empty and which are vacant, you won't know when you must follow the vacant unit rule, says Johnson. This rule says that if an eligible low-income household moves out of a unit at your site, the owner can still claim credits for that unit as long as you make reasonable efforts to rent it to another eligible household and no available unit of comparable or smaller size is rented to any ineligible household. The rule applies to vacant units only, he notes—not empty units.
In addition, not knowing whether your unoccupied units are vacant or empty can also prevent you from having your building's first-year fraction meet the owner's target, says Johnson. Although vacant units are unoccupied, they still count toward the first-year fraction because they've already been qualified, he explains. Until the owner's target is met, you should always try to rent your empty units before re-renting any vacant units, he adds.
A.J. Johnson, HCCP: President, A.J. Consulting Services, Inc., 3521 Frances Berkeley, Williamsburg, VA 23188; www.ajjcs.net.