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IRS Announces a Safe Harbor in Revenue Procedure 2005-37

Wednesday, June 22, 2005 - 8:00AM

The Internal Revenue Service (IRS) announced a safe harbor in Revenue Procedure 2005-37 under which state housing agencies and low-income housing tax credit (LIHTC) project owners may meet the requirements of Internal Revenue Code Section 42 concerning extended low-income housing commitments. As described in Question and Answer #5 of Revenue Ruling 2004-82, Section 42(h)(6)(B)(i) requires that eviction and rent increase restrictions apply throughout the extended use period and not simply for the three years after that period – an interpretation contrary to industry practice. The safe harbor in Rev. Proc. 2005-37 allows LIHTC commitments entered into before January 1, 2006 to use catch-all language to comply with this interpretation. Specific language relating to the restrictions must be included in commitments executed after December 31, 2005.

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