IRS Proposes Allowances for LIHTC Properties

WASHINGTON, DC-The IRS has issued proposed regulations that would allow owners of Low-Income Housing Tax Credit properties to change the methods used to calculate the rents owed when residents pay their own utility allowances.

Under current IRS rules tax credit rents there is a utility allowance for resident-paid utilities. According to the property owners’ lobbying efforts, the current methods used to calculate the resident’s utility cost tend to overestimate these costs.

The result, supporters of the new regs say, is reduced gross rents for the owner and, potentially, a LIHTC project that is no longer financially feasible.