Dos & Don'ts

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Make sure that you verify every source of income a household reports. A household isn’t qualified unless you have the verifications to prove it. So if you accept a household without verifying all its income, the owner won’t be able to claim tax credits for the household’s unit. And if the owner needs to count the unit to meet the minimum set-aside, the owner won’t be able to claim credits.

The Housing and Economic Recovery Act of 2008 (HERA) eliminated the annual income recertification requirement for 100 percent buildings. Each state agency, however, may opt to tighten the rule and impose its own recertification requirements. In addition, some owners may still complete annual recertifications to meet compliance requirements for other funding sources such as bonds or HOME funds.

The paperwork associated with tax credit sites is formidable. Owners and managers must not only deal with paperwork generated from the application process, but also annual owner certifications and submissions of various compliance forms on an annual basis.

If your tax credit site lets residents pay their rent by credit card, consider letting prospects pay their security deposits by credit card as well, suggests property manager Kristen Morgan. Doing so can increase the likelihood that prospects will sign a lease when they first visit your site, she says.

Try staggering your maintenance staff's hours to add perceived value to your site, suggests marketing expert Tracey Hopkins. Maintenance staffs typically work the same hours that residents work, which means that most residents don't see the maintenance staff hard at work to keep the site running smoothly. But in marketing, visibility equals value, explains Hopkins.

If your community room is part of the site's basis for tax credit calculation purposes, meaning that the owner counts it as part of the property for which the state has awarded tax credits, don't permit commercial use of this room. To permit this type of use would reduce the amount of tax credits the owner could claim. IRS regulations prohibit commercial use of resident facilities such as community rooms, if those facilities are included in a portion of the building that's counted for tax credit purposes [Internal Revenue Code, Sec 1.42-5 (c)(viii)].

An owner can claim only the credits allocated to him by his state housing credit agency. Suppose an owner is in the process of leasing up a brand-new 80 percent tax credit building and the marketing department brings in nine qualified low-income households. Eight of the 10 units must be rented to qualified households.

Don't count a child as part of two households if her parents live in separate units at your site and share custody. According to the HUD Handbook, you must count a child in a joint custody arrangement as part of a household if that child is “present in the household 50 percent or more of the time” [HUD Handbook 4350.3, par.3-6(E)(4)(b)]. Ask the households for a copy of their joint custody agreement, which should outline the days and times the child must spend with each parent. Use this information to determine which household the child belongs to for income purposes.

Don't round down the number of units you must rent to qualified low-income households to meet your minimum set-aside, warns A.J. Johnson, president of A.J. Johnson Consulting Services. Rounding down may seem like an attractive option because it leaves you free to charge market-rate rents for one more unit, he admits. But if you round down, you won't meet the set-aside, and the owner won't be able to claim any of its tax credit, he cautions.

Before buying the first pesticide on the shelf that promises to eradicate bedbugs, check the label, warns the U.S. Environmental Protection Agency (EPA). The agency says that this year's widely publicized bedbug outbreaks across the United States have spawned an increase in the number of companies offering solutions—often with unrealistic promises of effectiveness or low cost.