This webpage is intended to provide you with the latest information on Section 42 issues. Here, you will find news updates from the Internal Revenue Service, perspectives offered by expert practitioners, general public policy information and NAHMA position statements.  NAHMA hopes that you will consider this page a valuable resource for information you may require about the Section 42 Low Income Housing Tax Credit.

In addition to Section 42 information, this page will also include items of interest to members who manage and / or own properties financed with state bonds. Members are also invited to visit the Tax Credit Committee webpage to view the agendas and minutes of the NAHMA Tax Credit Committee meetings. For copies of the IRS/Treasury LIHC Newsletter, please click here: Low Income Housing Credit Newsletter.

Data Sets/General Information for LIHTC Program

Disaster Assistance

Fair Housing Act

On May 17, 2004, HUD and the U.S. Department of Justice (DOJ) issued a Joint Statement on “Reasonable Accommodations Under the Fair Housing Act.” This document is intended to provide “technical assistance regarding the rights and obligations of persons with disabilities and housing providers under the [Fair Housing] Act relating to reasonable accommodations.”

Since violations of the Fair Housing Act are cause for a finding of non-compliance in the tax credit program, NAHMA Tax Credit Committee members are strongly encouraged to review the HUD-DOJ joint statement. As members review the information, they are reminded that the requirement for the owner to pay for reasonable modifications as required under Section 504 of the Rehabilitation Act of 1973 is limited to programs or activities operated by recipients of federal financial assistance (4350.3 REV-1, Section 2-8). A property where the Low Income Housing Tax Credit is the only “federal” program involved, typically is not required to follow the provisions of Section 504. However, owners/managers are cautioned to be aware of state law and/or provisions of the property’s Regulatory Agreement which may impose specific requirements when determining who is required to pay for approved reasonable modifications.

Click here to read the Joint Statement.

Housing and Economic Recovery Act of 2008

IRS has released their Notice 2008-106 which informs taxpayers that the new 9 percent applicable percentage floor for certain buildings that are placed in service after July 30, 2008, and before December 31, 2008, enacted pursuant to § 3002(a)(1) of the Housing Assistance Tax Act of 2008, applies notwithstanding a pre-Act irrevocable election by the taxpayer to apply to these buildings an applicable percentage that is less than 9 percent.

On September 17, the IRS released a notice providing guidance on the certain tax credit provisions of the recently enacted H.R. 3221, the American Housing and Economic Recovery Act of 2008, this week.  The notice provides guidance for how the 2008 Housing Act Volume cap will be distributed to states to help finance “qualified housing issues” for qualified residential rental properties and mortgage issues.  Please find the breakdown of the $11 billion increase in the volume cap increase in each state in Section 3.3.  Issuers will be allowed flexibility in their coordinated use between the General Volume Cap and the 2008 Housing Act Volume Cap and may identify carryforwards for use for “qualified housing issues” as needs dictate.  The notice also gives directions on information reporting and carryforward elections for the use of the 2008 Housing Volume Cap in Section 3.6.  The notice also stipulates the uses of the 2008 Housing Act Volume Cap for mortgage credit certificates in Section 4.  Section 6 identifies the military instillations whose members are qualified to have their basic housing allowance payments excluded from income determination in low-income housing tax credit properties.  These bases are:

Name of Military Installation State
U.S. Air Force Academy Colorado
Fort Shafter Hawaii
Fort Riley Kansas
Annapolis Naval Station (including U.S. Naval Academy) Maryland
Fort Jackson South Carolina
Fort Bliss Texas
Fort Hood Texas
Dam Neck Training Center Atlantic Virginia
Naval Station Bremerton Washington

Finally, Section 7 provides temporary authority to Federal Home Loan Banks to guarantee certain tax-exempt bonds and guidance on tax-exempt bonds eligible for such guarantees.

Please find the notice available at: http://www.irs.gov/pub/irs-drop/n-08-79.pdf

LIHTC Advocacy – Miscellaneous

Ernst and Young has also provided the industry with a detailed report on the state of investment in the LIHTC program. The report looks at the state of the LIHTC market and discusses several key legislative proposals the industry, including NAHMA, support as ways to stabilize LIHTC in the wake of the financial crisis. A copy of the summary and report may be found below.

NAHMA’s “Financial Meltdown” Task Force, led by Chair Jim McGrath and Co-Chair George Caruso, have drafted a LIHTC Stabilization White Paper of NAHMA’s recommendations to stabilize and restart the LIHTC marketplace and feedback on additional proposals in response to the current financial crisis. NAHMA members are encouraged to contact and forward this important information to their Representatives and staff.

NAHMA formally requested an extension of the LIHTC temporary recapture relief period for properties in the Gulf Coast affected by Hurricanes Katrina, Rita and Wilma. Click here to read the letter.

NAHMA sent a letter to Treasury and IRS officials to follow-up on five key topics of interest to NAHMA members: energy costs; disaster relief in the Gulf Coast; good cause eviction protection in Rev. Rul. 2004-82; proposed treatment of over-income families due to a change in household; and student eligibility for LIHTC housing. Click here to read the letter.

Additional Documents

* House Ways and Means Chairman Rangel’s Note to Treasury Secretary Paulson on the Tax Credit Crisis (Nov. 18, 2008)

*FHFA Statement Of Support For Multifamily Housing Finance Activities Of The Enterprises While In Conservatorship

*Congress’ Joint Committee on Taxation Summary of the Tax Changes in H.R. 3221

Qualified Contract Provisions

Revenue Rulings and Procedures

A “revenue ruling” is an official interpretation of the Internal Revenue Code, statutes, tax treaties or regulations issued by the IRS. It is the IRS’ conclusion of the law applies to a specific set of facts.