year 15 documentation issues
DESCRIPTION
Year 15 Documentation Issues. Michael Kotin Kay-Kay Realty Corp. 2007. Understand the Parameters. Understand the Parameters. Recap of Critical Documents:. Understand the Parameters. Recap of Critical Documents: Its still Real Estate. Understand the Parameters. - PowerPoint PPT PresentationTRANSCRIPT
Year 15 Documentation Issues
Michael KotinKay-Kay Realty Corp.
2007
Understand the Parameters
Understand the Parameters
Recap of Critical Documents:
Understand the Parameters
Recap of Critical Documents:
Its still Real Estate
Understand the Parameters
Recap of Critical Documents:
Its still Real Estate
Don’t let the tax tail wag the economic dog
Understand the Parameters
Recap of Critical Documents:
Seller’s Partnership Structure
Understand the Parameters
Recap of Critical Documents:
Seller’s Partnership Structure LP Splits Ultimate Tax Credit Investor
Understand the Parameters
Recap of Critical Documents:
Seller’s Partnership Structure LP Splits Ultimate Tax Credit Investor
It’s a small world.
Understand the Parameters
Recap of Critical Documents:
Land Use Restriction Agreement
Understand the Parameters
Recap of Critical Documents:
Land Use Restriction Agreement Extended Use provisions continue May restrict or define Target Population May restrict or define Income Limits
Understand the Parameters
Recap of Critical Documents:
Land Use Restriction Agreement
Example: LURA provides 100% income restriction at 50% incomes. New contemplated tax credit structure at “40/60” will not supercede 50% income limitation
Transfers with Credits Remaining
As it pertains to Compliance three areas:
Transfers with Credits Remaining
As it pertains to Compliance three areas:
First Year Files
Current Files
State Housing Agency
Transfers with Credits Remaining
First Year Files
Tenant Files8609s8609AsLURA
Transfers with Credits Remaining
Current Files
Tenant Files
Back to initial qualification
Utility Allowances
Transfers with Credits Remaining
State Agency:
Last annual report
Open compliance issues
Non-corrected 8823s
Year 15 Transfers
Don’t Need:
Year 15 Transfers
Don’t Need:
Initial Tenant Files
Year 15 Transfers
Don’t Need:
Initial Tenant Files Resolution of 8823s
Year 15 Transfers
Don’t Need:
Initial Tenant Files Resolution of 8823s Annual Reports
Year 15 Transfers
Don’t Need:
Initial Tenant Files Resolution of 8823s Annual Reports
Why?No credits to lose !!
Only ongoing requirement is in LURA
Year 15 Transfers
Do Need:
Current Tenant Files LURA
Key Dates
Key Dates
Tenant Qualification as of Transfer Date
NOT Tenant Qualification as of Tenant Move-in Date
NOT Tenant Qualification as of last Recertification Date
Key Dates
Last Certification date can be use to ESTIMATE Qualified Occupancy
Does not actual determine Qualified Status.
Key Dates
Last Certification date can be use to ESTIMATE Qualified Occupancy
Does not actual determine Qualified Status.
2007 is year 15. Tenant is Qualified at
May-07 move-in. Property purchased
Jan-08.
Key Dates
Last Certification date can be use to ESTIMATE Qualified Occupancy
Does not actual determine Qualified Status.
2007 is year 15. Tenant is Qualified at May-
07 move-in. Property purchased Jan-08.
May-07 irrelevant Status at Jan-08 relevant May-07 qualification does
not “warm body” unit for new owner
Key Dates
Critical factor is whether Tenant is Qualified as of Transfer Date.
Key Dates
Critical factor is whether Tenant is Qualified as of Transfer Date.
May wish to obtain “Interim Certification” do better estimate qualified percentage.
Key Dates
Critical factor is whether Tenant is Qualified as of Transfer Date.
May wish to obtain “Interim Certification” do better estimate qualified percentage.
Application and verifications may be obtained in advance of transfer.
Key Dates
Critical factor is whether Tenant is Qualified as of Transfer Date.
May wish to obtain “Interim Certification” do better estimate qualified percentage.
Application and verifications may be obtained in advance of transfer.
TIC must be certified to new owner.
Key Dates
Critical factor is whether Tenant is Qualified as of Transfer Date.
May wish to obtain “Interim Certification” do better estimate qualified percentage.
Application and verifications may be obtained in advance of transfer.
TIC must be certified to new owner.
Doesn’t matter if same management company.
Tenant Qualification
Tenant Qualification
Three Possibilities
1. Tenant income is below move-in limits
Tenant Qualification
Three Possibilities
1. Tenant income is below move-in limits
2. Tenant income is above 140% recertification limits
Tenant Qualification
Three Possibilities
1. Tenant income is below move-in limits
2. Tenant income is above 140% recertification limits
3. Tenant income is above move-in limits but below 140% recertification limits
Tenant Qualification
Tenant income is below move-in limits:
Tenant Qualification
Tenant income is below move-in limits:
1. May income qualify existing resident as initial “warm body” tenant for new tax credits.
Tenant Qualification
Tenant income is below move-in limits:
1. May income qualify existing resident as initial “warm body” tenant for new tax credits.
2. Application and verification may be completed before transfer date but certification must be to new owners after transfer date.
Tenant Qualification
Tenant income is below move-in limits:
1. May income qualify existing resident as initial “warm body” tenant for new tax credits.
2. Application and verification may be completed before transfer date but certification must be to new owners after transfer date.
3. May retroactively complete qualification after transfer within first 120 days of ownership.
Tenant Qualification
Tenant income is below move-in limits:
1. May income qualify existing resident as initial “warm body” tenant for new tax credits.
2. Application and verification may be completed before transfer date but certification must be to new owners after transfer date.
3. May retroactively complete qualification after transfer within first 120 days of ownership.
4. Existing lease may transfer and does not need to be rewritten.
Tenant Qualification
Tenant income is below move-in limits:
5. 6 month non-transient safe harbor rule does not apply.
Tenant Qualification
Tenant income is above 140% of applicable move-in limit:
Tenant Qualification
Tenant income is above 140% of applicable move-in limit:
1. Unit is no longer technically a tax credit unit.
Tenant Qualification
Tenant income is above 140% of applicable move-in limit:
1. Unit is no longer technically a tax credit unit.
» Prohibition against no-cause evictions do not apply.
Tenant Qualification
Tenant income is above 140% of applicable move-in limit:
1. Unit is no longer technically a tax credit unit.
» Prohibition against no-cause evictions do not apply.
» 3-year trailer for rent protection does not apply.
Tenant Qualification
Tenant income is above 140% of applicable move-in limit:
2. Tenant may be non-renewed at lease expiration
Tenant Qualification
Tenant income is above 140% of applicable move-in limit:
2. Tenant may be non-renewed at lease expiration
» Does not override protection offered by state and local ordinances which may apply.
Tenant Qualification
Tenant income is above 140% of applicable move-in limit:
2. Tenant may be non-renewed at lease expiration
» Does not override protection offered by state and local ordinances which may apply.
» Does not override protection offered to project-based or voucher-based Section 8 tenants.
Tenant Qualification
Tenant income is above 140% of applicable move-in limit:
3. Credits may commence after existing Tenant is gone and a new qualified household occupies the unit.
Tenant Qualification
Tenant income is above move-in limits but under 140% of applicable move-in limit:
Tenant Qualification
Tenant income is above move-in limits but under 140% of applicable move-in limit:
1. This is the problem scenario.
Tenant Qualification
Tenant income is above move-in limits but under 140% of applicable move-in limit:
1. This is the problem scenario.
2. Still considered a tax credit unit.
» Prohibition against no-cause evictions do apply.
» 3-year trailer for rent protection does apply.
Tenant Qualification
Tenant income is above move-in limits but under 140% of applicable move-in limit:
3. Qualification at move-in with old ownership does NOT “grandfather” qualified status to resident.
Tenant Qualification
Tenant income is above move-in limits but under 140% of applicable move-in limit:
Options:
Treat unit as a market rate unit and forego any credits on the unit.
Tenant Qualification
Tenant income is above move-in limits but under 140% of applicable move-in limit:
Options:
Treat unit as a market rate unit and forego any credits on the unit.
Treat unit as a non-qualified tax credit unit. A undetermined amount of tax credits will flow in subsequent years (possibly as 15 year credits) when the unit is actually occupied by a qualified household.
» Requires special treatment in LP Agreement
Tenant Qualification
Tenant income is above move-in limits but under 140% of applicable move-in limit:
Options:
Treat unit as a market rate unit and forego any credits on the unit.
Treat unit as a non-qualified tax credit unit. A undetermined amount of tax credits will flow in subsequent years (possibly as 15 year credits) when the unit is actually occupied by a qualified household.
» Requires special treatment in LP Agreement
Buy the tenant out.
Interim
Interim
Extended Use Agreement still applies.
Interim
Extended Use Agreement still applies.
Most states require continued documentation at initial occupancy.
Interim
Extended Use Agreement still applies.
Most states require continued documentation at initial occupancy.
Recertification is not required in most states after 15-year initial compliance period.
Interim
Extended Use Agreement still applies.
Most states require continued documentation at initial occupancy.
Recertification is not required in most states after 15-year initial compliance period.
3-year rent protection trailer continues for all qualified residents in possession at end of initial credit period.
Interim
Extended Use Agreement still applies.
Most states require continued documentation at initial occupancy.
Recertification is not required in most states after 15-year initial compliance period.
3-year rent protection trailer continues for all qualified residents in possession at end of initial credit period.
Prohibition against no-cause evictions still applies for all qualified residents in possession at end of intitial credit period.
Interim
If property will not be placed-in-service in year of acquisition:
Interim
If property will not be placed-in-service in year of acquisition:
Most states require continued documentation at initial occupancy.
Interim
If property will not be placed-in-service in year of acquisition:
Most states require continued documentation at initial occupancy.
Recertification is not required in most states after 15-year initial compliance period.
Interim
If property will not be placed-in-service in year of acquisition:
Most states require continued documentation at initial occupancy.
Recertification is not required in most states after 15-year initial compliance period.
3-year rent protection trailer continues for all qualified residents in possession at end of initial credit period.
Interim
If property will not be placed-in-service in year of acquisition:
Most states require continued documentation at initial occupancy.
Recertification is not required in most states after 15-year initial compliance period.
3-year rent protection trailer continues for all qualified residents in possession at end of initial credit period.
Prohibition against no-cause evictions still applies for all qualified residents in possession at end of intitial credit period.
Interim
If property will not be placed-in-service in year of acquisition:
Interim
If property will not be placed-in-service in year of acquisition:
New residents should be income qualified at move-in.
Interim
If property will not be placed-in-service in year of acquisition:
New residents should be income qualified at move-in.
“Grandfathering” rules will apply at January 1st of P-I-S year pursuant to 2003-82.
Interim
If property will not be placed-in-service in year of acquisition:
New residents should be income qualified at move-in.
“Grandfathering” rules will apply at January 1st of P-I-S year pursuant to 2003-82.
Current and new residents who vacate prior to January 1st of P-I-S year do not “warm body” the unit.