20-40_Chap02FederalRequirements

20-40_Chap02FederalRequirements - Chapter 2, Federal...

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Chapter 2, Federal Requirements Tax Credit Compliance Procedures Manual www.wshfc.org/managers/ComplianceProceduresManuals.htm Rev. June 2010 tonbar 2- 1 Federal Requirements Summary ¡ To qualify for tax credits, a property must meet either the 20/50 or 40/60 test (see Chapter 1, Introduction, for explanation of the 20/50- 40/60 test). ¡ All affordable unit Households must have their anticipated income for the next 12 months certified at time of initial occupancy. ¡ Recertifications of income are required by the Commission and other public funders. ¡ Individuals in a Household don’t have to be related. ¡ All affordable units must be rent and income-restricted. ¡ Gross rent cannot exceed 30% of the imputed limit under which the Household qualifies. This formula is based on an imputed Household size of 1.5 persons per bedroom. See the Compliance website for maximum allowable limits by county: www.wshfc.org/limits/map.asp ¡ The maximum Resident rent that can be charged is determined after subtracting out a utility allowance for any Resident-paid utilities. ¡ Rules specify which utility allowance to use, depending on whether buildings receive HUD or Rural Development (formerly FmHA/RHS) assistance, or whether a Resident receives Section 8 assistance. ¡ Affordable units must be suitable for occupancy and be rented to the general public on a non-Transient basis. ¡ A unit is not “qualified” until it is initially occupied by a qualified Household. ¡ If an affordable unit becomes vacant, and the last occupant was a qualified Household, the vacant unit continues to be considered an affordable unit, as long as the next available unit of comparable size or smaller is rented to a qualified Household (“Vacant Unit Rule”). ¡ If an affordable Household’s income increases above 140% of the elected applicable minimum election income limit (50% or 60%), the next available unit of comparable or smaller size must be rented to a qualified affordable Household (“Available Unit Rule”). ¡ Certain Households are not qualified for tax credit housing, e.g., if all the occupants of a unit are fulltime Students, the unit is generally not eligible for tax credits. ¡ Properties must comply with all Fair Housing regulations.
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Chapter 2, Federal Requirements Tax Credit Compliance Procedures Manual www.wshfc.org/managers/ComplianceProceduresManuals.htm Rev. June 2010 tonbar 2- 2 ¡ After January 1, 1990, all tax credit properties must have a Regulatory Agreement (extended use agreement) recorded as a restrictive covenant against the subject property. ¡ Owners must make annual certifications regarding compliance and must maintain records verifying Household qualification. ¡ Noncompliance is reportable to the IRS and may result in recapture of
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This note was uploaded on 03/31/2012 for the course TAX 4001 taught by Professor Robertmcgee during the Spring '09 term at FIU.

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20-40_Chap02FederalRequirements - Chapter 2, Federal...

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