NMHC and NAA on December 16 provided comments to the Treasury Department and Internal Revenue Service (IRS) regarding proposed regulations implementing the average income test option under the Low-Income Housing Tax Credit (LIHTC). This NMHC- and NAA-supported provision makes the LIHTC program more flexible and allows for more mixed-income housing by enabling the program to serve households earning up to 80 percent of area median income (AMI). Income averaging provides 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 AMI.
The multifamily industry is concerned that if not modified prior to being finalized, the proposed regulations could have unintended consequences and prevent the effective use of the average income option. In particular, we are concerned that the proposed regulations: (1) pose excessive risk to violating minimum set-aside rules; and (2) prevent taxpayers from modifying income designations and, thereby: (A) trigger potential conflicts with other Federal statutes, (B) potentially prevent the use of other Federal subsidy programs, and (C) create difficulties for prospective residents on waitlists or to correct compliance issues.
To address these issues, NMHC and NAA are requesting that the final regulations: (1) treat LIHTC set-aside requirements to be met so long as 40 percent or more of the units in a project are occupied by residents earning an average of 60 percent or less of AMI; and (2) enable taxpayers to modify unit designations so long as the change: (1) does not cause the development to violate set-aside requirements; and (2) the State Housing Finance Agency approves.
For more information on our past advocacy work on this issue, please visit the LIHTC NMHC advocacy webpage.
- ACTION Coalition Letter to Treasury Regarding Community Development Tax Incentives
- Real Estate Coalition Letter Regarding the Coronavirus State and Local Fiscal Recover Fund (SLFRF) Housing Credit
- Low-Income Housing Tax Credit
- Treasury, IRS Issue Guidance Related to LIHTC Relief Requirements
- NMHC Calls on Treasury to Modify Guidance When Using LIHTC