The Department of the Treasury and the Internal Revenue Service posted a proposed rule on the Average Income minimum set-aside election. The proposed rule would require properties electing the average income minimum set-aside to designate the imputed income limit of each low-income unit no later than the close of the first taxable year of the LIHTC period. To avoid noncompliance and recapture, owners would only be allowed to take mitigating steps with 60 days of year-end.
The guidance has a helpful take on the next available unit rule (NAUR). If multiple units are over-income at the same time in a building with market-rate units, property owners need not comply with NAUR in a specific order. Renting “any available comparable or smaller vacant unit to a qualified tenant maintains the status of all over-income units” as LIHTC qualified.
For more analysis, please view this blog post authored by Mark Shelburne at Novogradac or this post from by Glenn Graff at Applegate & Thorne-Thomsen. Comments are due by December 29, NH&RA plans to submit comments and encourages our members to do so as well. The proposed rule specifically allows owners to maintain compliance with existing rule while this proposed rule is being promulgated.
