Affordable Housing Connections
July 24, 2020 - § 42 Notice 2020-53
In response to § 42 of the Internal Revenue Code
Effective July 1, the IRS provided temporary relief provisions relating to COVID-19 impacts in Notice 2020-53 for owners and residents of Low Income Housing Tax Credit and tax-exempt bond financed developments. AHC has reviewed the provisions and is providing the following guidance for management companies and owners related to compliance.
Reasonable period for restoration or replacement in the event of a casualty loss or major disaster
If a low income building has suffered casualty loss (including those due to a prior Major Disaster) and the reasonable period to restore ends on or after April 1, 2020 and before December 31, 2020, the last day for the owner to restore the loss is postponed to December 31, 2020.
Reminder that all casualty losses need to be reported to AHC. Forms for reporting this information can be found on our website.
All recertifications due prior to April 1, 2020 are required. Income recertifications are not required for the period of April 1, 2020 and December 31, 2020. For recertifications due between April 1, 2020 and December 31, 2020, the next income recertification must be completed on or before the anniversary of when it should have been done.
For example, if an initial certification or recertification has an effective date of 5/1/2019, the next recertification must be completed on or before 5/1/2021. This relief provision applies to both projects in the initial compliance period and those in the extended use period.
Please note that Initial Certifications are NOT included in the relief provisions and still must be completed.
Owners are still required to recertify student status. Failure to recertify student status for projects in the 15-year compliance period is subject to reporting to IRS on form 8823.
Owners are not required to exercise these relief provisions and are permitted to continue completing income recertifications. AHC has seen most 2020 income recertifications completed in files reviewed prior to IRS guidance and encourages owners to continue doing so where possible.
If the owner elects to follow these relief provisions, they may certify on the 2020 HTC-12 that they have complied with the requirement of completing annual income recertifications.
Common Areas and Ammenities
If an amenity or common area is temporarily closed during some or all of the period from April 1, 2020 to December 31, 2020 due to COVID-19 (and not because of other noncompliance) this temporary closure does not result in a reduction of the eligible basis of the building.
Emergency Housing for Medical Personnel and Other Essential Workers
Suballocators are not allowing this provision at this time. Should the need for essential workers to relocate for purposes of COVID-19 be determined in the future, we will revisit this relief provision.
Tenant File Reviews (TFRs) and UPCS Inspections
AHC will continue to complete tenant file reviews as scheduled with safety protocols in place. AHC will request that files be brought to our office for review. The specifics of this process will be included in the BLD notice to the property. AHC will not be completing any further UPCS inspections during calendar 2020.
HOME Assisted Properties
The only relief provision available at this time for HOME assisted projects is the HUD waiver that delays the requirements for annual recertifications and compliance reviews. The waiver states that HOME assisted projects that would have been subject to an inspection and/or an onsite review (review of tenant files) during the waiver period must be physically inspected within 120 days of the end of the December 31, 2020 waiver period.
As stated above, AHC has been and will continue to complete tenant file reviews of HOME assisted projects. For HOME assisted projects on an annual inspection cycle, AHC will not make up the 2020 physical inspection but instead will conduct the physical inspection at the time of the project’s annual onsite review in 2021.
AHC will contact each PJ individually to make inspection arrangements for those HOME assisted projects that are on a 2 or 3 year inspection cycle and were scheduled for an onsite review in 2020. We will notify management companies and owners individually about these inspection arrangements once determined.
Affordable Housing Connections
We deliver monitoring, training and technical assistance to property owners and managers to protect the investment of private equity and tax dollars and to ensure continued quality affordable rental housing.