Should Transfer to Ground-Floor Unit Be Treated as New Move-In?

May 4, 2010
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If you are thinking about transferring a person to a ground floor unit to accommodate his disability, you may be risking your tax credits if you accommodate his request. That is, if you are the owner of a 100 percent tax credit multi-building site and transferring the resident to another building.

According to the IRS, such a transfer is considered a new move-in, for which you must certify that the resident is eligible for the new unit. If he is eligible, there is no problem. But if he is now over-income—that is, his income has increased to over 140 percent of the tax credit program limits—you may lose credits for the new unit.

But, there is a catch. In addition to the tax credit regulations, you have to consider the federal Fair Housing Act (FHA). A court could rule that you must accommodate that resident by moving him to any available ground-floor unit at the site, even if it’s not in the same building. The federal government has given no clear guidance on whether your duty to comply with the FHA takes priority over your need to stay in tax credit compliance. It is also unclear whether state housing agencies will report you to the IRS for noncompliance with tax credit rules if you transfer a resident in order to comply with the FHA. Be sure to talk to your lawyer and your state housing agency to evaluate your liability if you are planning an accommodation for an over-income disabled resident by moving him to another unit.