IRS Provides COVID-19 Relief for LIHTC and Bond Requirements
The Internal Revenue Service today provided long-awaited, much-needed relief for low-income housing tax credit (LIHTC) properties facing COVID-19 related challenges. The guidance in Notice 2020-53 falls into four overall categories.
The notice allows longer time to meet timing requirements. Specifically, if
- the last day to meet the 10 percent test was;
- the 24 month minimum rehabilitation expenditure period for a building originally ended;
- a LIHTC building suffered a casualty loss and the reasonable restoration period ended;
- a LIHTC building, due to a prior Major Disaster, suffered a casualty loss that would have reduced its qualified basis and if the reasonable period to repair and restore ended;
- the last day of a 12-month transition period for a qualified residential rental project ended;
- a bond is used to provide a qualified residential rental project and if the two year rehabilitation expenditure period for the bond ended
on or after April 1, 2020 and before Dec. 31, 2020, these deadlines are now Dec. 31, 2020.
Unfortunately, there is no extension of the requirement, applicable to properties with a carryover allocation agreement in 2018, to place buildings in service by the end of the calendar year. There is also no extension of any deadlines past Dec. 31, 2020. LIHTC allocating agencies still may provide relief from that deadline under existing guidance.
The notice also says
- LIHTC property owners are not required to perform income recertifications, and
- allocating agencies are not required to conduct compliance monitoring inspections or reviews
between April 1 and Dec. 31, 2020. While the language (and context) clearly encompass agency staff physically visiting properties, less clear is the federal expectation to conduct reviews of tenant files.
Closing an amenity or common area during some or all of the period between April 1 and Dec. 31, 2020 in response to COVID-19 (as opposed to other noncompliance) does not result in a reduction of eligible basis.
For purposes of providing emergency housing under existing IRS guidance, medical personnel or other essential workers (as defined by a state or local government) providing services qualify as “Displaced Persons” April 1 to Dec. 31, 2020.