In response to the ongoing COVID-19 pandemic, the Internal Revenue Service (IRS) issued
Notice 2020-53
to provide tax relief to issuers, operators, owners, and tenants of qualified low-income housing projects or qualified residential rental projects financed with exempt facility bonds and state agencies that have jurisdiction over these projects. This Notice, and the provisions contained therein, went into effect on July 1, 2020.
For certain time-sensitive actions scheduled to be performed and requirements to be met on or after April 1, 2020, and before December 31, 2020, owners and operators now have until December 31, 2020, to perform the actions and satisfy the requirements, as more specifically detailed below:
- 10-Percent Test for Carryover Allocations: if the last day for an owner of a building with a carryover allocation to meet the 10-percent test was on or after April 1, 2020, and before December 31, 2020, the last day for the owner to meet the 10-percent test has been postponed until December 31, 2020.
- 24-Month Minimum Rehabilitation Expenditure Period: if the 24-month minimum rehabilitation expenditure period for a building originally ended on or after April 1, 2020, but before December 31, 2020, the last day for the owner to incur the minimum rehabilitation expenditure with respect to the building has been postponed until December 31, 2020.
- Reasonable Period for Restoration/Replacement in the Event of Casualty: if a low-income building has suffered a casualty loss and the reasonable period to restore by reconstruction or replacement ends on or after April 1, 2020, but before December 31, 2020, the last day for the owner of the building to restore the loss by reconstruction or replace is postponed until December 31, 2020.
- Reasonable Restoration Period in the Event of Prior Major Disaster: if a low-income building, due to a prior Major Disaster, has suffered a casualty loss that would have reduced its qualified basis and if the reasonable restoration period (as determined by the Agency) for the building ends on or after April 1, 2020, but before December 31, 2020, the last day for the owner of the building to complete the repairs and restoration is postponed until December 31, 2020.
- 12-Month Transition Period to Meet Set-Asides: the last day of a 12-month transition period for a qualified residential rental project that ends on or after April 1, 2020, but before December 31, 2020, is postponed to December 31, 2020.
- 2-Year Rehab Expenditure Period for Bonds used to Provide Qualified Residential Rental Projects: if a bond is used to provide a qualified residential rental project and if the 2-year rehab expenditure period for such bond ends on or after April 1, 2020, but before December 31, 2020, the last day of that period is postponed to December 31, 2020.
Further, between the dates of April 1, 2020 until December 31, 2020, owners of qualified low-income housing projects are not required to perform certain income recertifications or reduce the eligible basis in a building because of the temporary closure of an amenity or common area due to the pandemic, and state agencies that have jurisdiction over the projects are not required to conduct compliance-monitoring (as described below). The IRS also issued
proposed regulations
relating to the compliance-monitoring duties of state agencies for purposes of the low-income housing credit. The proposed regulations relax the minimum compliance-monitoring sampling requirement for purposes of physical inspections and low-income certification review, providing flexibility and reduced burdens with respect to the requirements set forth in the final regulations published on February 26, 2019. Lastly, for the duration of the COVID pandemic, medical personal or other essential workers may be treated as "Displaced Individuals" and be eligible for emergency housing in low-income housing.
- Income Recertifications: an Owner of a low-income building is not required to perform income recertifications in the period beginning on April 1, 2020 and ending on December 31, 2020. However, the Owner must resume the income recertifications as due after December 31, 2020.
- Compliance Monitoring: an Agency is not required to conduct compliance-monitoring inspections or reviews in the period beginning on April 1, 2020, and ending on December 31, 2020. However, the Agency must resume compliance-monitoring inspections or reviews as due after December 31, 2020.
- Common Areas and Amenities: if an amenity or common area in a low-income building or project is temporarily unavailable or closed during some or all of the period from April 1, 2020 to December 31, 2020, specifically in response to the COVID-19 pandemic, and not because of other reasons, this temporary closure does not result in a reduction of the eligible basis of the building.
- Emergency Housing for Medical Personnel and Other Essential Workers: if individuals who are medical personal or other essential workers (as defined by State and local governments) provide services during the COVID-19 pandemic, then, for the purpose of providing emergency housing from April 1, 2020 to December 31, 2020, Agencies, Issuers, Owners and Operators may treat these individuals as if they were Displaced Individuals, and may provide housing for these individuals pursuant to the provisions of the applicable revenue procedure.
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