The IRS recently issued Notice 2022-05 which extends previously issued temporary relief for properties financed with low-income housing tax credits and private activity tax-exempt bonds. This is in response to the ongoing pandemic and related new variants.
What Does Notice 2022-05 include?
The extended relief offered by Notice 2022-05 relating to low-income housing tax credit properties includes an extension of the deadline for the 10% Test, an extension for the 24-month minimum rehabilitation expenditure period, an extension for the placed in service deadline, an extension to the reasonable period for restoration or replacement in the event of casualty loss, an extension to satisfy occupancy obligations, and an extension to the agency correction period.
IRS Notice 2022-05 also includes relief for operational issues. This relief includes an extension of the requirement for a 30-day notice for housing finance agency reviews of tenant files through the end of 2022. The relief also allows housing finance agencies to defer physical inspections through June 30, 2022, as well as provides an option to extend the deferral of physical inspections through December 31, 2022, depending on transmission rates in the location of the property as determined in consultation with local public health experts. IRS Notice 2022-05 also states that the closure of amenities or common areas in low-income housing tax credit properties due to COVID-19 will not result in a reduction of eligible basis through December 31, 2022. Finally, medical personnel and other essential workers (as defined by state or local governments) may be provided emergency housing in low-income housing tax credit properties through December 31, 2022.
IRS Notice 2022-05 also provides relief to tax-exempt bond properties in that if the last day of a 12-month transition period for a qualified residential rental project originally was on or after April 1, 2020, and before December 31, 2022, then that last day is postponed to December 31, 2022. Additionally if a bond is used to provide a qualified residential rental project and if the last day of the Section 147(d) 2-year rehabilitation expenditure period for the bond originally was on or after April 1, 2020, and before December 31, 2023, then that last day is postponed to the earlier of eighteen months from the original due date or December 31, 2023.
McKonly & Asbury is a leader in accounting for affordable housing partnerships. Our team has the specialized knowledge to help you ensure you comply with IRS and tax credit allocating agency reporting requirements. For more information on these services and more be sure to visit our Affordable Housing page, and don’t hesitate to contact us.