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Property Compliance News Briefs - April 2016

The Internal Revenue Service (IRS) and the U.S. Department of the Treasury released final and temporary regulations March 3 that amend the utility allowance regulations concerning the low-income housing tax credit (LIHTC). The final regulations provide that utility costs paid by a LIHTC property tenant based on actual consumption in a sub-metered, rent-restricted unit are treated as paid by the tenant directly to the utility. Therefore, those utility costs do not count against the maximum rent that the LIHTC building owner can charge. The temporary regulations extend the principles of these sub-metering rules to LIHTC property owners that provide low-income tenants with energy directly acquired from a renewable source and that is not delivered by a local utility provider. The regulations are available at www.taxcredithousing.com and were effective March 3.

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The IRS published final and temporary regulations Feb. 25 relating to LIHTC compliance monitoring. The amendments revise and clarify the requirement to conduct physical inspections and review low-income certifications and other documentation. Temporary regulations were effective Feb. 25, and expire Feb. 22, 2019. The IRS concurrently issued Rev. Proc. 2016-15, which provides that the minimum number of low-income units in a LIHTC development that must undergo physical inspection is the lesser of 20 percent of the low-income units in the property, rounded up to the nearest whole number, or the number of low-income units set forth in the Low-Income Housing Credit Minimum Unit Sample Size Reference Chart in the revenue procedure. The same rule applies to determine the minimum number of units that must undergo low-income certification review. Both documents are available at www.taxcredithousing.com.

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The Wisconsin Housing and Economic Development Authority (WHEDA) announced Feb. 10 that its risk and compliance team completed an in-depth review of its multifamily best practices guide and revised audit requirements. Due to the changes made for audit requirements, WHEDA adjusted the timing of Form 400–Compliance Certificate, as well as Surplus Real Estate Tax Escrow. For the 2015 financial statements, Form 400 should be remitted with the submission of the financial statements. In the future, this form should be completed and remitted with the capital budget. For Surplus Real Estate Tax Escrow, WHEDA will return any excess surplus tax escrow in late February to the operating accounts after the real estate tax analysis is completed. In addition, on Feb. 22, WHEDA announced that online registration is open for the 2016 tax credit compliance workshops. There will be two workshops, May 12 and Sept. 15. The course will cover basic compliance and is intended as an overview of the program, compliance requirement and WHEDA’s monitoring procedures. The new audit requirements are available at www.taxcredithousing.com

Journal Category:

Property Compliance

Authors:

Novogradac

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