Compliance

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Security deposits can become a source of conflict between owners and residents. A good rule of thumb with security deposits is to remember that, unlike any other money that you receive from a household, the security deposit remains the resident's money, says Daniel Bancroft, a Boston-area attorney who specializes in subsidized housing and property management.

Whether you're developing a new pet policy for your site or you have a strict no-pets rule, keep in mind that animals needed because of a disability are not pets.

No one wants to find out that his tax credit site has been cited for noncompliance, but if your state housing agency has issued the owner a Form 8823, your first reaction may be to panic. Don't.

“It's not the end of the world,” says Barbara Crook, compliance director for Affordable Housing Support Services, an affordable housing compliance consulting firm in Littleton, Colo. “Most likely, these are errors that can be fixed. The state agency usually will give you between 30 and 60 days to correct it, depending on the type of noncompliance.”

Not meeting the minimum set-aside requirement is a common reason that tax credit sites get cited for noncompliance. It's a mistake that has severe consequences: If your building or site fails to meet the minimum set-aside requirement at the close of the first taxable year of the credit period, the noncompliance cannot be corrected, and the owner is prohibited from ever claiming credits for that project.

If you're fortunate, your site may never be damaged by a flood, tornado, or other natural disaster. But the odds are, at some point, you'll find yourself dealing with property loss caused by an everyday hazard, such as fire, burst pipes, wind, hail, or sprinkler leakage.

If you manage a tax credit site that has funds through the HOME Investments Partnership (HOME) Program, then you know that you must meet the compliance requirements for both programs. But what happens when the two programs' requirements differ? How do you know which rules to apply?

We asked two leading tax credit compliance experts to review the top areas of conflict between tax credit and HOME requirements, and explain how to resolve them and stay in compliance.

Section 2002 of the Housing and Economic Recovery Act (HERA) of 2008 requires the U.S. Department of Housing and Urban Development (HUD) to collect the following data for low-income housing tax credit tenants:

• Race
• Ethnicity
• Family composition
• Age
• Income
• Use of Section 8 (or similar) rental assistance
• Disability status
• Monthly rental payment

(For more information, see Staying on Top of HERA: A Review of Key Provisions Impacting Compliance, sidebar #5.)

In July, the U.S. Department of Justice (DOJ) announced proposed regulations to expand the obligations of owners of commercial facilities, including those found at assisted housing and other residential multifamily sites, regarding accessibility for persons with disabilities.

In particular, the DOJ proposes adopting accessibility guidelines previously issued by the Architectural and Transportation Barriers Compliance Board to reflect the accessibility standards under the Americans with Disabilities Act (ADA).

The IRS recently issued circular chief counsel advisory (CCA) 2008812023, requiring that tax credits be allocated in accordance with depreciation deductions. The coordinated allocation should occur wherever a partnership agreement provides for special allocations of depreciation that differ from the general allocation of partnership items, says Barry Jacobs, editor of Housing & Development Reporter.

As a site owner or manager, you may not be aware that the IRS has a “safe harbor” rule for tax credit sites. The safe harbor rule lets low-income residents qualify for units before the beginning of the first taxable year of a building's tax credit period, says affordable housing expert A.J. Johnson, an expert in IRS rules as applied to tax credit sites.