2. LIHTC (Low Income Housing Tax Credit) Program & Compliance
Trainer: Greg Gunn

3. Summary
This session will focus on the unique requirements of the LIHTC subsidy. Emphasis will be placed on maintaining compliance with the many different tax credit requirements. Come see how Winten2+ can help keep your program in good standing with your State Finance Agency and investors.

4. Agenda Tax Credit Program Timeline Dual Subsidies and RA
Compliance with Tax Credit Rules (Student, 140%, Next Available Unit)
Winten2+ LIHTC Functionality
Questions

5. Tax Credit Overview
Called LIHTC; Acronym for “Low Income Housing Tax Credit”
Also called “Section 42”(from IRS Code)
Can be a stand alone program
Often layered with other programs (such as Multi-Family/TRACS) creating a Dual-Subsidy situation

6. Agencies Involved Tax Credits created by the IRS
Allocated to State Housing Finance Agencies
Review Plans and make awards Issues Form 8609: Allocates Tax Credit
Monitor Compliance Issues Form 8823: Compliance Form
50 States / 50 Sets of Rules

7. Timing for Credits & Compliance
Clock begins when development is first placed in service
First 10 Years = Tax Credit Period
First 15 Years = Compliance Period
Extra 15 Years = Extended Use Period
Total = 30 years

8. Similarities between LIHTC & HUD
Provide Affordable Housing Options
Income Based Eligibility
Use HUD Handbook for income/asset rules & verification guidance
Require Income Certification
Penalties for Non-Compliance

9. Differences between LIHTC & HUD
Affordable -vs- Actual Rental Subsidy
HUD Income Adjusted (expenses)
HUD Requires Full Annual Re-Certifications
Eligible Citizen Rule (section 214)
LIHTC Student Rule
LIHTC 140% Rule
LIHTC Next Available Units (NAU) Rule

10. Dual Subsidy Compliance Rule
When the two or more programs differ on terms of eligibility, the rule of thumb is to follow the MOST restrictive regulation.
Learn the particulars of EACH to satisfy the requirements of BOTH
LIHTC
HUD

11. LIHTC Student Rule
100% Full Time Student Households INELIGIBLE unless one of the following applies:
ALL members Married (eligible to file jointly)
Single Parent (non-dependent) with Dependent children
Receiving Title IV Assistance (TANF)
Full time Job Training Program
Former Foster Care

12. LIHTC 140% Rule Below Applicable Limit
From Applicable Unit up to 140% of that Limit
Over 140% of the Applicable Limit
Over-Income

13. LIHTC Next Available Unit Rule
Triggered by Over-Income Household (140%)
Next Available Unit of comparable or smaller size must be rented to a qualified household
Rent must remain restricted
Household CANNOT transfer to another building
Continues until 1st Year Applicable Fraction is restored

14. Applicable Fraction
Determined in First Year using the LESSER of these 2 calculations:
# of LIHTC Qualified Units/Total # of Units
Sq. Ft of LIHTC Qualified Units/Total Sq. Ft of All units

15. Minimum Set Asides 20% of units/50% of AMI or below
Initially selected on 8609 (part II) and CANNOT be changed

16. Penalties
Penalties: Sanctions issued by the State Housing Finance Agency
Disallowance: Credits that are not allowed to be taken for the current year (all or part)
Recapture: Recovery of previously awarded tax credits PLUS interest

17. Penalties continued…
If a LIHTC development falls below its First Year Applicable Fraction then it will result in a percentage reduction of the tax credit that may be claimed for that year.
If a LIHTC development falls below its Minimum Set-Aside then no tax credit may be claimed for that year.

18. Document Retention Keep EVERYTHING at least 6 Years
Keep 1st Year Records 6 Years beyond final year of compliance (21 years)

19. Penalties continued…
If a LIHTC development falls below its First Year Applicable Fraction then it will result in a percentage reduction of the tax credit that may be claimed for that year.
If a LIHTC development falls below its Minimum Set-Aside then no tax credit may be claimed for that year.

20. Penalties continued…
If a LIHTC development falls below its First Year Applicable Fraction then it will result in a percentage reduction of the tax credit that may be claimed for that year.
If a LIHTC development falls below its Minimum Set-Aside then no tax credit may be claimed for that year.

21. Penalties continued…
If a LIHTC development falls below its First Year Applicable Fraction then it will result in a percentage reduction of the tax credit that may be claimed for that year.
If a LIHTC development falls below its Minimum Set-Aside then no tax credit may be claimed for that year.

22. Penalties continued…
If a LIHTC development falls below its First Year Applicable Fraction then it will result in a percentage reduction of the tax credit that may be claimed for that year.
If a LIHTC development falls below its Minimum Set-Aside then no tax credit may be claimed for that year.

23. Penalties continued…
If a LIHTC development falls below its First Year Applicable Fraction then it will result in a percentage reduction of the tax credit that may be claimed for that year.
If a LIHTC development falls below its Minimum Set-Aside then no tax credit may be claimed for that year.

24. Penalties continued…
If a LIHTC development falls below its First Year Applicable Fraction then it will result in a percentage reduction of the tax credit that may be claimed for that year.
If a LIHTC development falls below its Minimum Set-Aside then no tax credit may be claimed for that year.

25. Penalties continued…
If a LIHTC development falls below its First Year Applicable Fraction then it will result in a percentage reduction of the tax credit that may be claimed for that year.
If a LIHTC development falls below its Minimum Set-Aside then no tax credit may be claimed for that year.

26. Penalties continued…
If a LIHTC development falls below its First Year Applicable Fraction then it will result in a percentage reduction of the tax credit that may be claimed for that year.
If a LIHTC development falls below its Minimum Set-Aside then no tax credit may be claimed for that year.

27. Let’s take a Closer Look
From Slides to Winten2+

28. Questions?

29. Trainer Information
Greg Gunn
x 1351

30. Thank You for Your Time & Attention
Trainer: Greg Gunn