NAHMA LIHTC Update: Housing Credit Disaster Relief for California Wildfires; LIHTC Interest Rates for October 2019

NAHMA LIHTC Update: Housing Credit Disaster Relief for California Wildfires; LIHTC Interest Rates for October 2019

Recently, the IRS released information regarding disaster relief for LIHTC properties impacted by California’s major wildfires, as well as October’s federal interest rates for LIHTC credits.

  1. Low-Income Housing Credit Disaster Relief for the State of California

Recently, the IRS issued Notice 2019-52, which expands the emergency housing and compliance monitoring relief provided in response to the devastation caused by the California Wildfires to Butte, Los Angeles, and Ventura counties beginning on November 8, 2018. The Notice extends the incident period for Temporary Housing solely in connection with the CA Wildfires Major Disaster until the end of July 2020. Additionally, the Notice extends the due date for its compliance review of low-income housing projects one calendar year from November 25, 2018 (or the date of the building’s restoration and placement again in service).

Lastly, the Notice requests comments regarding possible modifications to Revenue Procedures 2014-49 and 2014-50; these Revenue Procedures provide the temporary relief from certain requirements of the Internal Revenue Code (IRC) in the context of a major disaster, including guidance and relief to owners of qualified low-income housing projects. Please submit any comments to NAHMA by Friday, October 25, 2019. To view the attached notice online, please click here.

  1. Low-Income Housing Tax Credit Rates for October 2019

The IRS recently issued Revenue Ruling 2019-23, which provides various prescribed rates for federal income tax purposes, including applicable federal interest rates, adjusted applicable federal interest rates, and adjusted long-term and tax-exempt rates for October 2019.

As provided in the ruling, Table 4 contains LIHTC Appropriate Percentages Under Section 42(b)(1) for September 2019:

  • Appropriate percentage for the 70% present value low-income housing credit: 7.39%
  • Appropriate percentage for the 30% present value low-income housing credit: 3.17%

Note: Under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after July 30, 2008, shall not be less than 9%. To view the attached revenue ruling from the IRS online, please click here.