IRS Provides Temporary Relief for LIHTC

Disaster Response

In a victory for NAHB and its members, the Internal Revenue Service today announced temporary relief from certain requirements under Section 42 of the Internal Revenue Code for Low-Income Housing Tax Credit (LIHTC) projects. In light of financing and construction delays and other challenges resulting from COVID-19, NAHB requested in April that the IRS extend all relevant LIHTC deadlines.

IRS Notice 2020-53 provides relief for deadlines occurring on or after April 1, 2020 and before Dec. 31, 2020. In general, deadlines occurring within that time span are postponed until Dec. 31, 2020. This relief applies to:

  • 10-percent test for carryover allocations
  • 24-month rehabilitation expenditure period
  • Reasonable period for restoration or replacement in the event of a casualty loss
  • Reasonable restoration period in the event of prior major disaster
  • 12-month transition period to meet set-asides for qualified residential rental projects
  • 2-year rehabilitation expenditure period for bonds used to provide qualified residential rental projects

In addition, owners are not required to perform income recertifications in the period beginning on April 1, 2020, and ending Dec. 31, 2020. Owners must resume income recertifications due after Dec. 31, 2020.

Agencies are also not required to conduct compliance monitoring inspections or reviews during this period. The IRS also clarifies that common areas and amenities that are temporarily unavailable or closed due to COVID-19 during this time period do not result in a reduction of the eligible basis of the building.

Finally, the IRS notice allows property owners to provide temporary emergency housing to medical personnel and other essential workers as if they were displaced individuals.

NAHB is providing this information for general information only. This information does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind nor should it be construed as such. 

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