Tax News

CCH (cch.taxgroup.com) reports:

  The IRS has suspended several requirements for low-income housing credit projects in Wisconsin, in response to severe storms and flooding that destroyed or damaged many homes. The suspension allows owners of approved low-income housing credit projects to use vacant units to provide temporary housing to displaced individuals. The suspension is effective on June 14, 2008.

  The suspension of the requirements applies when these conditions are satisfied:

  (1) The displaced person must have resided in a Wisconsin jurisdiction designated for Individual Assistance by the Federal Emergency Management Agency as a result of the severe storms and flooding that began on June 5, 2008.

  (2) The Wisconsin Housing and Community Development Authority must approve the housing project for the suspension.

  (3) The project owner must meet certification and recordkeeping requirements with respect to each displaced individual.

  (4) Rents for the low-income units that house displaced individuals must not exceed the existing rent-restricted rates for the low-income units.

  (5) Existing tenants in occupied low-income units cannot be evicted or have their tenancy terminated as a result of efforts to provide temporary housing for displaced individuals.

  The Wisconsin Housing and Community Development Authority will establish a temporary housing period for each housing project, which cannot extend beyond July 31, 2009. During the temporary housing period, certain income limits are suspended; the nontransient use requirement does not apply; and units occupied by displaced persons do not have to be marketed to low-income individuals.

  In addition, for the first year of the credit period during the temporary housing period, displaced persons will be deemed to be low-income tenants for purposes of determining the project's qualified basis and for meeting its 20-50 test or 40-60 test. During the temporary housing period after the first year of the credit period, temporary occupancy of a vacant unit by a displaced person will not affect the status of the unit (that is, market-rate, low-income or never previously occupied). Also, if the income of occupants in low-income units exceeds 140 percent of the applicable income limitation, the temporary occupancy of a unit by a displaced individual will not cause application of the available unit rule. However, displaced individuals will no longer be deemed to be low-income tenants.

Notice 2008-61, 2008FED ¶46,507

Other References:

 
Code Sec. 42

  CCH Reference - 2008FED ¶4385.27

  Tax Research Consultant

  CCH Reference - TRC BUSEXP: 54,220.30