Three Things You Need to Know About Unit Transfers
From time to time, you may receive requests from households that want—or need—to move to a new unit. For instance, they may need a larger unit, or they may desire a unit on a higher floor, or they may need a ground-floor unit to accommodate a disability. The IRS has made it clear that you don't need a special reason to transfer a household to a different unit at your tax credit site.
However, while the IRS has removed many of the restrictions, paperwork, and risks of transferring low-income households, some site managers remain reluctant to grant transfers for fear of unintentionally putting the owner's tax credits at risk. Let's look at some of the issues that have owners and managers treading lightly in their approach to unit transfers.
Know When to Recertify—and When Not to
Some site managers are taking a restrictive approach to unit transfers by completing new certifications and lease agreements when a household transfers to another unit within the same building, says Tonya Evans, LIHTC Compliance Technical Advisor, Oregon Housing and Community Services (OHCS). But she points out that “they're creating extra work that is unnecessary.” Why? When a qualified household requests a transfer to another unit within the same building, the household's file (which includes the income certification and lease) simply transfers with them, she explains.
Another point to keep in mind is that, for unit transfers within the same building, the two units swap status—the vacated unit assumes the status that the newly occupied unit had prior to being occupied by the current household—even if the units are not comparably sized. In addition, the newly occupied unit remains rent restricted, even if the household's income exceeds 140 percent of the current area median gross income (AMGI).
The revised 8823 Guide offers this example of how to handle a unit transfer that takes place within the same building: A household that was initially income-qualified is living in tax credit unit in a mixed-use project. At the household's last annual income recertification, it was determined that their income exceeds 140 percent of the current AMGI. The household moved from a two-bedroom over-income unit (Unit A) to a vacant three-bedroom low-income unit (Unit B). Even though the units differ in size, they swap their tax credit status: Unit A is now a low-income unit, and Unit B is an over-income unit.
Know What the Owner Elected
If you have more than one building at your tax credit site, you may transfer a household to a unit in a different building as long as both buildings are considered to be part of a multiple building project, says Evans.
If you are unsure whether a building is included in the project, it's important to check with the owner to see what was elected. Owners must commit to their decision when they file IRS Form 8609. Make sure you get one Form 8609 for each building at the site, then review this form to confirm certain key elections your site owner made.
If the owner checked “yes” on line 8b of both forms, then both buildings are part of a multiple building project. In this case, households may transfer to a different building in the same project as long as their income does not exceed 140 percent of the maximum income limit for the site, based on their most recent income certification.
According to the IRS, owners and managers of 100 percent tax credit sites may transfer households between buildings within the site even if they don't know the household's current income. In such cases, “we defer to the income listed on the most recent certification,” says Evans.
If “no” is checked on line 8b for either one of the buildings, then the owner has chosen to treat the buildings as separate projects and transfers between the two buildings cannot take place. Instead, the household will need to be considered as a new move-in, and must qualify again for the LIHTC program.
Know When to Consult Your HFA Compliance Officer
Sometimes, households may request to move to another unit to accommodate a household member's disability. For instance, a mobility-impaired resident may ask to transfer to a ground-floor unit or a specially adapted unit. The Fair Housing Act requires you to grant such requests as long as they're reasonable.
When considering special accommodations requests, keep in mind that, if the household does not qualify for the tax credit program, you may reject the request without violating fair housing law. However, Evans cautions that owners and managers should never turn down a unit transfer request for reasonable accommodation without first consulting with their assigned housing finance agency compliance officer. She recalls a recent case in which a household living in a second-floor unit requested a transfer to a ground-floor unit because one member of the household had become disabled. She could no longer use the stairs to get to the unit, and there was no elevator. However, the household's income was more than 140 percent of the current applicable income limit, and the only available ground-floor unit was in a different building.
“We chose to seek IRS guidance, and were told to use a common-sense approach,” she says. “We granted the request because it made sense. Furthermore, we felt that not allowing the transfer to take place could potentially open the owner and agent (as well as OHCS) up to a lawsuit.
“I think that, in most cases, reasonable accommodations can be granted while keeping a household in place. But as we know, sometimes an exception arises that does not fall under any one category, and there is no specific rule or regulation to refer to in order to find the answer. The result is that we are faced with making the decision on our own, in the best way we know how—by using common sense,” she says.
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