The Internal Revenue Service (IRS) on January 29 released a revenue ruling clarifying how to compute the average income test under the Low-Income Housing Tax Credit (LIHTC).
Legislation enacted in 2018 enables properties to meet LIHTC requirements by providing owners the option of reserving 40 percent (25 percent for New York City) of the units in a property for people whose average income collectively is below 60 percent of area median income (AMI). Previously, LIHTC program rules required owners to either rent 40 percent of their units to households earning no more than 60 percent of AMI, or 20 percent to those earning no more than 50 percent of AMI.
NMHC and NAA support the income averaging provision that makes the LIHTC program more flexible and allows for more mixed-income housing. For more information on the LIHTC, please visit our advocacy page.