Last week, the Internal Revenue Service published Revenue Ruling 2021-20, which limits the LIHTC buildings that are eligible for the fixed four percent floor. Buildings that received draw-down bonds issued prior to 2021, a de minimis Section 42(h)(4)(A) obligation issued after Dec. 31, 2020 or a de minimis allocation of LIHTC funds occurring after Dec. 31, 2020 are not eligible for the four percent floor.
In Revenue Procedure 2021-43, IRS clarifies that a building’s financing is not deemed de minimis if the aggregate amount of the post-2020 obligations is at least ten percent of the total amount of all obligations that finance the building. A post-2020 allocation of LIHTCs is not deemed de minimis if the allocation is at least ten percent of the total allocations to the building that have been made on or before the date of the allocation in question.
