Owners Can Get Utility Estimate for Each Unit in Building, Says IRS

Owners Can Get Utility Estimate for Each Unit in Building, Says IRS

The IRS is permitting owners of tax credit sites to obtain a utility estimate for each unit in a building from the allocating agency.

This development is the culmination of five years’ effort on the part of the National Leased Housing Association (NLHA), the National Multi Housing Council (NMHC), and other housing advocacy groups, says Denise Muha, NLHA’s executive director.

The IRS had been pushed to establish rules by which owners would have more options for determining utility allowance at tax credit sites. Housing groups have long argued that existing means of determining PHA utility allowances or local utility estimates were insufficient, Muha says. Use of current methodology has been particularly problematical for new construction, which is generally more energy efficient.

Under existing regulations, telephone costs are already excluded in the determination of utility allowances to be included in the gross rent. And, according to the IRS’s final rule, telephone costs continue to be excluded, as are costs of cable television and Internet access.

The IRS “energy estimate” will measure information about local utility rates, site type, variations in climate depending on states in which sites are located, charges and taxable amounts of utility costs, building materials and operating systems. In addition, the IRS will let state allocating agencies use utility company usage data and rates for buildings.

However, the IRS is offering an alternative option. Owners may use the “HUD Utility Schedule Model” to compute utility allowances. HUD developed the model based on the U.S. Department of Energy’s Residential Energy Consumption Survey (RECS). To access the model, go to

Source: Denise Muha: Executive Director, National Leased Housing Association