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Tax Relief for Low-Income Housing Tax Credit and Bond Participants

AAFCPAs would like to make clients aware that, in response to the COVID-19 pandemic, the Internal Revenue Service announced it is providing low-income housing tax credit (LIHTC) participants temporary relief from key program requirements. The relief is detailed in Notice 2020-53 released on July 1st, 2020.

This guidance relaxes certain LIHTC requirements under Section 42 of the Internal Revenue Code (the Code).

Notice 2020-53 Extends Due Dates for Low-Income Housing and Qualified Rental Projects

In response to the ongoing Coronavirus Disease 2019 (COVID–19) pandemic, the IRS postponed or suspended several deadlines for low-income housing requirements through December 31, 2020.

The Notice extends certain deadlines until December 31, 2020, that must be met to qualify for tax credit under Section 42 of the Internal Revenue Code. In particular, if any of the following deadlines occur within the Relief Period (April 1, 2020 to Dec 31, 2020), then parties have until the end of 2020 to satisfy those timing requirements:

  • 10% test for carryover allocations;
  • The 24-month minimum rehabilitation expenditure period;
  • The reasonable period for restoration or replacement in the event of casualty loss;
  • The reasonable restoration period in the event of prior major disaster;
  • The 12-month transition period for qualified residential rental projects; and
  • The 2-year rehabilitation expenditure period for bonds used to finance qualified residential rental project.

Some compliance requirements are also suspended during this same period:

  • The owner of a low-income building is not required to perform income re-certifications during the Relief Period.
  • A housing credit agency is not required to conduct compliance-monitoring inspections or reviews that are due during the Relief Period.
  • The temporary unavailability or closure of an amenity or common area in a low-income building or project during some or all of the Relief Period does not reduce the eligible basis of the building. However, the amenity or common area must be unavailable or closed solely in response to the COVID-19 pandemic, and not because of any other noncompliance.
  • Low-income housing projects may also provide emergency housing during the Relief Period to medical personnel and other essential workers (as defined by state and local government). These workers may be treated as Displaced Individuals and thus may provide emergency housing for them. LIHTC owners and operators are not required to offer temporary emergency housing, but if they do, they must comply with the rules provided in Revenue Procedure 2014-49 and Revenue Procedure 2014-50.

The Owner must resume the re-certifications, and the Agency must resume the inspections, as due after the Relief Period.

If you have any questions, please contact Brittany Besler, MBA, CPA, Esq. at 774.512.9001, bbesler@nullaafcpa.com; Matthew Troiano at 774.512.4022, mtroiano@nullaafcpa.com; or your AAFCPAs Partner.

About the Authors

Brittany Besler
Brittany possesses a unique combination of tax, legal, and business backgrounds, and is a valuable member of AAFCPAs’ Tax practice. She provides tax planning, research, and compliance solutions for corporations, partnerships, nonprofits, individuals, estates & trusts. Brittany advises businesses and individuals on various federal, state, local and foreign tax-related issues, including counseling clients on the consequences of new and updated tax laws. She assists clients in the creation of appropriate and optimal organizational structures, and advises on tax planning and tax exemption compliance. She advises newly-formed and well-established nonprofit clients on meeting compliance requirements of various government agencies, including the IRS rules on fundraising and political activities.
Troiano-Matthew
Matt is a hands-on leader in the firm’s community and economic development practice, serving community development corporations (CDCs), affordable housing and mixed-use real estate projects, and their lending institutions. He also has extensive experience serving multiservice human & social service providers. He advises these sophisticated nonprofits and their related for-profit limited partnerships, providing assurance solutions and assessing tax situations to help maximize profits while minimizing tax liability.