In response to the COVID-19 pandemic, the Internal Revenue Service announced it is providing low-income housing tax credit participants temporary relief from key program requirements.
“For certain time-sensitive actions scheduled to be performed and requirements to be met on or after April 1, 2020, and before December 31, 2020, owners and operators now have until December 31, 2020, to perform the actions and satisfy the requirements,” said the agency. This includes the 10% test for carryover allocations, the 24-month minimum rehabilitation expenditure period, and the reasonable period for restoration or replacement in the event of casualty loss.
“Further, between April 1, 2020, and December 31, 2020, owners of qualified low-income housing projects are not required to perform certain income recertifications or reduce the eligible basis in a building because of the temporary closure of an amenity or common area due to the COVID-19 pandemic, and state agencies that have jurisdiction over the projects are not required to conduct compliance-monitoring,” according to the announcement.
The relief is detailed in Notice 2020-53.
The IRS also said medical personnel and other essential workers providing services during the pandemic can be treated as “displaced individuals” and are eligible for housing in low-income properties.
“Prior to the COVID-19 crisis, nearly 11 million renter households were spending more than half of their income on rent, and now millions more are facing economic hardship, compounding the need for affordable housing,” says Emily Cadik, executive director of the Affordable Housing Tax Credit Coalition (AHTCC). “These flexibilities will allow us to keep developments moving forward more efficiently so the housing credit can continue to provide homes to those in need.”
The guidance includes many of the regulatory accommodations requested by the National Council of State Housing Agencies (NCSHA) and supported by AHTCC and its partners.
“We thank the IRS for recognizing the immediate need for greater flexibility on behalf of providers of affordable housing and the low-income families we serve,” says Michael Gaber, president of the AHTCC board of directors and executive vice president of WNC. “These are common-sense measures that will have a significant impact as we work to provide homes across the country.”
The notice did not address placed-in-service deadlines, according to an NCSHA summary.