understanding income limits - mhdc - eligibility with income limits.pdfhera special income limits...
TRANSCRIPT
Topics We Will Discuss Today • Definition of Project • 8609 Election, Part II Line 8b • Project Configurations • Income Limits
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Definition of a ‘Project’
The TheoPRO Group: Setting the Standard of Excellence
The 8609 documents the definition of Project PART II, Line 8b: either— Each building is its own project, or… Each building is part of a multiple-building project.
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Definition of a ‘Project’
The TheoPRO Group: Setting the Standard of Excellence
Two or more qualified low-income buildings can be included in a project only if the buildings are: 1. located on the same tract* of land, unless all units in in all buildings being aggregated in the
multiple building project are low-income units . See Sec. 42(g)(7), for scattered site projects.
2. owned by the same entity for federal tax purposes.
3. financed under a common plan for financing.
4. similarly constructed housing units.
If any of the above is different, a new project is created
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* “Tract" means any parcel or parcels of land which are contiguous except for the interposition of a road, street, stream or similar property. Otherwise, parcels are contiguous if their boundaries meet at one or more points.”
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Except of Form 8609 Instructions about Building Election 8b.
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Examples of Possible Projects 1. Single Project Consisting of One Building
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The TheoPRO Group: Setting the Standard of Excellence
Examples of Possible Projects 2 . Single Project with Multiple Buildings
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Examples of Possible Projects 3 . Multiple Projects Under One Project Name
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Single Project with Multiple Buildings
Parkview Apartments consists of 3 buildings 10 units per Building
Buildings Placed in Service beginning October 2012
Owner elected ‘Yes’ on Forms 8609 Part II 8b, to include
each of the three buildings as part of one ‘project’. All will use the same income and rent limits based on the date the FIRST building in the project is placed in service.
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Parkview Apartments 2 . Single Project with Multiple Buildings
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The TheoPRO Group: Setting the Standard of Excellence
Multiple Projects Under One Project Name
Parkview Apartments consists of 3 separate projects
10 units per project (building)
Buildings Placed in Service October 2012.
40-60 Minimum Set-Aside
Owner elected ‘No’ on Forms 8609 Part II 8b. Thus each building is its own ‘project’ and could have its own separate income and rent limits.
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Parkview Apartments 3 . Multiple Projects Under One Project Name
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The TheoPRO Group: Setting the Standard of Excellence
EACH building is its own project unless the owner elects to make each building part of a multiple building project on the Form 8609, Part II.
All buildings that will be part of a multiple building project must be indentified on an attachment to each Form 8609 for the project.
Failure to add this information results in each building being its own project.
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LIHTC Income Limits Building versus Project
Choosing ‘Yes’ or ‘No’ on 8609 question 8b.
Can the 8b election make a difference with your apartment complex’s rental revenue?
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Income Limits Choosing ‘Yes’ to 8b – Multifamily Tax Subsidy Program (MTSP)
hold harmless for income limits is determined by the place in service date of the first building in the project.
Choosing ‘No’ to 8b – MTSP hold harmless limit for each building is determined by the placed in service date of the each building. Consider: Buildings that place in service in the subsequent calendar
year may end up with lower income limits and lower maximum LIHTC rents.
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The TheoPRO Group: Setting the Standard of Excellence
Note Sure Which Election to Make on Form 8609?
IRS has issued private letter rulings that permitted late 8609
elections where there was reasonable cause.
Watch 8609s carefully.
You can assist in making the appropriate elections if you
understand the outcome/impact.
Only the project requesting PLR can rely on the ruling.
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Which Income Limit Do We Use?
Here are the choices: MTSP Dataset Current 50% or 60% Limit
MTSP Dataset HERA 50% or 60% Limit
NNMGI Income Limits?
Which Income Limit Do We Use?
Here are the choices: New Projects placing in service must use the most current year MTSP income limits within 45 DAYS after the date the limits are released.
Gross rent limits are calculated based on income limits for Section 42 projects
More to come re The 45-Day Choice!
Which Income Limit Do We Use?
Here are the choices: MTSP Dataset Current 50% or 60% Limit
MTSP Dataset HERA 50% or 60% Limit
NNMGI Income Limits?
Which Income Limit Do We Use?
Here are the choices: Existing Projects placed in service after 12/31/08 use the HIGHEST ‘Hold Harmless’ income limits since their placed in service date.
Tax credit projects use the accompanying gross rent limits.
More to come on this!
Which Income Limit Do We Use?
Here are the choices: MTSP Dataset Current 50% or 60% Limit or
MTSP Dataset HERA 50% or 60% Limit
NNMGI Income Limits?
Which Income Limit Do We Use?
Here are the choices: HERA Special income limits (for projects in
HERA-protected Metropolitan Statistical Areas (MSA) placed in service as of 12/31/08).
Gross rent limits are calculated based on income limits for Section 42 projects.
Which Income Limit Do We Use for NNMGIs? National Non-metropolitan Median Gross Income limits (for GO ZONE or RURAL projects)
Definition of ‘RURAL’ has been expanded to keep current NNMGI in place for all areas currently defined as ‘rural’ in spite of population increases up to 35,000 until 2020. More at www.theopro.com/what’snew
Gross rent limits are calculated based on income limits for Section 42 projects.
This just in!
Which Income Limit Do We Use? In some parts of the country National Non-
metropolitan Gross Income limits will be HIGHER than MSA/AMGI income limits.
Tax credit projects in these locations may use
these higher limits as long as the project is defined as ‘rural’.
Which Income Limit Do We Use?
Here are the choices: MTSP Dataset Current 50% or 60% Limit or
MTSP Dataset HERA 50% or 60% Limit or
NNMGI Income Limits?
The Income Limit Is Based On: For acquisition/rehab, generally use the date of acquisition for income limit reference.
More at TheoPRO5!
Remember:
New projects MUST use the current year income/rent limits even if they are LESS THAN prior year income limits.
HERA limits are only for projects already placed in service prior to 12/31/08.
Remember:
Existing projects income/rent limits DO NOT decrease in future years
They INCREASE when limits increase
based on the MTSP data set.
Remember:
What happens to the income limits also affects the rent limits. When MTSP income limits increase,
LIHC RENT limits increase, subject to State approval.
Once a project is placed in service LIHC income and rents DO NOT decrease.
Remember:
Your state housing finance agency or other programs may influence the income and rent limits for your project!
Example: COUNTY X $41900 MTSP 2014 Dataset 1 person 2 person 3 person 4 person 50% $18,150 $20,750 $23,350 $25,900 60% $21,780 $24,900 $28,020 $31,080 HERA 50% $18,800 $21,500 $24,150 $26,850 HERA 60% $22,560 $25,800 $28,920 $32,220
Example A The first building of a project is placed in service on February 14, 2014 4 person HERA 60% limit $32,220 4 person non-HERA 60% limit $31,080 Which income limits must be used for
a family of 4 persons? $31,080
Watch the 8609 Line 8b!!!
Example B The first building of a project was placed
in service on July 20, 2011 Required to use 2011 income/rent limits!
Can HERA Limits be used? NO!
Example B If income /rent limits for the MSA
DECREASE in any future year-- Project income/rent limits DO NOT
decrease!
Example: COUNTY X $41900 MTSP Dataset 1 person 2 person 3 person 4 person 60% $21,780 $24,900 $28,020 $31,080
YEAR 1
Example: COUNTY X $41900 MTSP Dataset 1 person 2 person 3 person 4 person 60% $21,780 $24,900 $28,020 $31,080 60% $20,150 $24,750 $27,350 $30,900
YEAR 1
Must an existing project’s income limits decrease? NO!
YEAR 2
Example: COUNTY X $41900 MTSP Dataset 1 person 2 person 3 person 4 person 60% $21,780 $24,900 $28,020 $31,080 60% $20,150 $24,750 $27,350 $30,900 60% $22,780 $25,900 $29,020 $32,080 Which limits can the existing project use?
YEAR 1
YEAR 2
YEAR 3
Example: COUNTY X $41900 MTSP Dataset 1 person 2 person 3 person 4 person 60% $21,780 $24,900 $28,020 $31,080 60% $20,150 $24,750 $27,350 $30,900 60% $22,780 $25,900 $29,020 $32,080 Which limits can the existing project use?
YEAR 1
YEAR 2
YEAR 3
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