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The Treasury Department and Internal Revenue Service (IRS) issued guidance on January 11 further extending relief from certain requirements under the Low-Income Housing Tax Credit and bonds for qualified residential rental projects. Acting to assist taxpayers negatively impacted by the ongoing COVID-19 pandemic, the guidance, among other provisions:
- Provides relief from the deadline to satisfy occupancy obligations. For a building with a first-year credit period closing between on or after April 1, 2020, and on or before December 30, 2022, for purposes of occupancy obligations, the qualified basis of the building for the first year of the credit period is calculated by including any increase in the number of low-income units by the end of the six-month period following the close of the first year.
- Extends the last day for an owner with a deadline on or after April 1, 2020, and on or before December 31, 2020, with a carryover allocation to meet the 10-percent test to the original deadline plus two years. If the original deadline is on or after January 1, 2021, and before December 31, 2022, the deadline is extended to December 31, 2022.
- Extends the deadline to meet the 24-month minimum rehabilitation expenditure period. If the deadline was originally between April 1, 2020, and on or before December 31, 2020, the original deadline is extended by 18 months. If the original deadline for the requirement falls on or after January 1, 2022, and on or before June 30, 2022, that deadline is extended to June 30, 2023. If the original deadline for the requirement falls on or after July 1, 2022, and on or before December 31, 2022, that deadline is extended to the original date plus 12 months. If the original deadline for the requirement falls on or after January 1, 2023, and on or before December 30, 2023, that deadline is extended December 31, 2023.
- Extends placed in service deadlines. If the original placed in service deadline was the close of calendar year 2020, it is extended to December 31, 2022. If the original placed in service deadline was the close of calendar year 2021 and the original deadline for the 10-percent test was before April 1, 2020, the new placed in service deadline is December 31, 2022. If the original placed in service deadline was the close of calendar year 2021 and the original deadline for the 10-percent test on or after April 1, 2020, the new placed in service deadline is December 31, 2023. If the original placed in service deadline was the close of calendar year 2022, the new placed in service deadline is December 31, 2023.
- Provides relief from compliance monitoring. The guidance allows for state agencies to suspend physical inspections to June 30, 2022 and, if COVID conditions warrant, to as late as December 31, 2022. Additionally, the guidance provides a reasonable notice period of up to 30 days when a state agency tells an owner before the end of 2022 that it will review low-income certifications of not-yet-identified low-income housing units.
- Clarifies that if common areas and amenities are closed or unavailable due to COVID-19 during some or all of the period between April 1, 2020, and December 31, 2021, eligible basis is not reduced. State agencies do have the ability to deny or condition the waiver.
