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IRS Issues Revenue Procedure on Safe Harbors for Bond Purchase Price Limits for Certain Statistical Areas

Wednesday, February 11, 2004 - 1:45AM

The Internal Revenue Service (IRS) yesterday issued Revenue Procedure 2004-18, which provides revised safe harbors for mortgage revenue bond purchase price limits for residences located in statistical areas in each state, the District of Columbia, Puerto Rico, the Northern Mariana Islands, American Samoa, the Virgin Islands and Guam. These safe harbors were last updated in Rev. Proc. 94- 55, and were based on housing price estimates calculated by the Department of Housing and Urban Development from mortgage data collected by the Federal Housing Finance Board (FHFB). The safe harbors in Rev. Proc 04-18 are based on the annual loan limits set by the Federal Housing Administration (FHA) on FHA-insured mortgages. Because FHA loan limits do not differentiate between new and existing residences, this revenue procedure sets forth a single average area purchase price that may be used as a safe harbor for both new and existing residences in each of the listed statistical areas. This revenue procedure also reflects the Office of Management and Budget’s (OMB) current definitions for the nation’s metropolitan statistical areas (MSAs), as contained in OMB Bulletin No. 03-04, dated and effective June 6, 2003.

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