Q&A on Tax Credit Site Leases

October 30, 2018    

When managing a tax credit site, you may be confused about what you can and can’t do when it comes to creating a lease for your low-income households. For instance, you may be unsure whether you can give households a one-month lease without putting your site owner’s tax credits at...

Compliance Basics of Acquisition and Rehab Credits

September 27, 2018    

The LIHTC program is an indirect federal subsidy used to finance the construction and rehabilitation of low-income affordable rental housing. LIHTC sites receive funding either as new construction or acquisition rehab. A recently published U.S. Government Accountability Office report on LIHTC...

How to Track Applicable Fraction to Help Avoid Tax Credit Loss

August 30, 2018    

Keeping each building’s applicable fraction on target is an essential part of a tax credit manager’s job. The applicable fraction is the percentage of a building’s units rented to low-income households. It comes into play when you calculate the building’s qualified basis...

Use Checklist to Review Household Files for Completeness

July 30, 2018    

It’s smart management practice to keep your household files up-to-date and complete all the time. Because LIHTC projects will be reviewed for compliance by the state and may be audited by the IRS, complete, well-organized files are very important.

Essential Addendums and Clauses to Include in Your LIHTC Lease

July 11, 2018    

When someone agrees to rent or lease an apartment, he signs a lease or rental agreement outlining the terms of the agreement. It’s a legally binding contract between the tenant and the owner that details the rights and responsibilities of each party. Unlike a typical market-rate apartment...

States' Preliminary Implementations of the Income-Averaging Option for Minimum Set-Asides

June 28, 2018    

The Consolidated Appropriations Act of 2018 established income averaging as a third minimum set-aside election, and this option happens to be one of the most significant changes to the LIHTC program in recent years. Every tax credit site must meet and maintain a minimum set-aside throughout the...

How to Fix Four Initial Certification Mistakes

May 24, 2018    

When performing the initial certification for a low-income household at your tax credit site, it’s easy to make mistakes. These mistakes can jeopardize the owner’s tax credits if your state housing agency finds them during an audit.

Make Sure PLR Request Contains Required Information

April 27, 2018    

A private letter ruling (PLR) is a written response issued by the IRS to an owner or taxpayer when the owner asks a question about the tax effects of its acts or transactions. The questions posed by site owners usually entail uncertainty about how to handle a situation and the need for guidance...

Follow Three Dos & Don'ts on Setting House Rules Affecting Children

March 29, 2018    

Like many tax credit managers, you may have considered setting house rules aimed specifically at children. Your motive may be concern for children’s safety around specific hazards like swimming pools. Or if you’ve been getting noise complaints from residents or have recently found...

Understanding the 'Suitable for Occupancy' Requirement

February 28, 2018    

As an owner or manager, it’s important to keep your designated low-income units qualified as such under tax credit rules. Unless a site is deep rent skewed, a LIHTC site must have either 20 percent of the units rent-restricted and occupied by a household with income at or below 50 percent...

Follow Six Dos & Don’ts When Counting Household Assets

January 31, 2018    

When calculating household income at initial certifications and at annual recertifications, if you have a mixed-income site, you must properly count the household’s assets. But this can be tricky if you’re not familiar with HUD’s rules.

If you’re not sure how to...

Four Common Misconceptions About the Applicable Fraction

December 28, 2017    

The applicable fraction is the percentage of rental units in a building that qualify as low-income units. Specifically, under Internal Revenue Code (IRC) §42(c)(1)(B), the applicable fraction is the smaller of the unit fraction or the floor space fraction. IRC §42(c)(1)(C) defines...