Today the Internal Revenue Service issued long-awaited guidance (Notice 2021-12) to extend Housing Credit program deadlines and provide other flexibilities in light of the COVID-19 pandemic.
In July, the IRS issued IRS Notice 2020-53, which provided important deadline extensions and other accommodations for the Housing Credit, including extensions of the 10 percent test and rehabilitation expenditures deadlines, compliance and review moratoriums, and other flexibilities needed to address COVID-19-related challenges, like social distancing policies. However, many of these deadlines expired at the end of 2020, and were in need of further extension.
In November the AHTCC led an effort in which over 140 of our partners signed onto a letter to the IRS and Treasury Department to request deadline extensions and other accommodations for the Housing Credit in light of the ongoing disruption to affordable housing development, construction and operations brought on by the COVID-19 pandemic.
The new guidance provides:
- Extensions until December 31, 2021, or one year from the original end date, whichever is earlier:
- The placed in service deadline, if the building was due to be placed in service in 2020,
- The reasonable restoration period for the restoration or replacement of a casualty loss, though the state agency may require a shorter extension, and
- The correction period if set by the state agency between April 1, 2020, and September 30, 2021.
- Extensions until September 30, 2021, or one year from the original end date, whichever is earlier, for properties where the original deadline was April 1, 2020, to September 30, 2021:
- The 10 percent test deadline,
- The 24-month minimum rehabilitation expenditure period, and
- The 2-year rehabilitation expenditure period for bonds used to provide qualified residential rental projects.
- Extension until September 30, 2021, for:
- The 12-month transition period to meet set-asides for qualified residential rental projects.
- Through September 2021:
- A moratorium on income recertifications and compliance monitoring inspections or reviews,
- Closed common areas will not reduce eligible basis,
- QAP hearings may take place by phone, and
- A continuation of the flexibility allowing for the emergency housing of medical personnel and other essential workers.
- If the close of the first year of the credit period with respect to a building is on or after April 1, 2020, and on or before June 30, 2021, then the qualified basis for the building for the first year of the credit period is calculated by taking into account any increase in the number of low-income units by the close of the 6-month period following the close of that first year.