CARH'S BROADCAST EMAIL - Regulatory Update
BROADCAST EMAIL – Regulatory Update
October 30, 2020
IRS Publishes Rule on Average Income Test
The Internal Revenue Service (IRS) published a proposed rule in the October 29th Federal Register entitled, “Section 42, Low-Income Housing Credit Average Income Test Regulations.” Once finalized, the rule would provide guidance on implementation of the Average Income Tax (AIT), as established by the Consolidated Appropriations Act of 2018, which allows owners of Housing Credit properties (for purposes of the tax code, the “taxpayer”) to elect to serve households earning as much as 80 percent of area median income (AMI), as long as the income designations of the units in the property average no more than 60 percent of AMI.
The proposed rule provides that if a property has multiple over-income homes, it does not need to meet the next-available-unit rule in a particular order. The proposed rule also provides flexibility in initially designating units, which needs to occur by the end of the first taxable year. Thereafter, the IRS proposes limits on subsequent changes and a process to address units going offline.
The CARH National Office is currently reviewing the proposed rule and will be submitting comments to the IRS before the deadline of December 29, 2020. Before that, we ask that you also take a look at it and forward any comments/suggestions that you may have no later than December 4, 2020. CARH wants to ensure any concerns and suggestions you may have are reflected in our submitted comments.