The Internal Revenue Service has issued guidance (IRS Notice 2022-05) to extend key Housing Credit program deadlines and provide other flexibilities in light of the COVID-19 pandemic.
The IRS initially provided Housing Credit deadline extensions and other accommodations in July 2020 (IRS Notice 2020-53). Many of those extensions had expired before the IRS issued further extensions in January 2021 (IRS Notice 2021-12), many of which had since expired again. The AHTCC submitted a letter to the IRS and Treasury Department in September 2021, urging Housing Credit regulatory relief to be further extended as impacts from the COVID-19 pandemic continue, and we have continued to push for these extensions along with the National Council of State Housing Agencies and other partners.
A summary of the guidance can be found below. Please see the detailed guidance for additional information, including parameters around applicable properties.
Deadlines extended to the end of 2022, at the latest:
- 10-percent test,
- 12-month transition period to meet set-asides for qualified residential rental projects, and
- Correction period (though the state agency may require a shorter extension).
Deadlines extended to the end of 2023, at the latest:
- Placed in service deadline,
- 24-month minimum rehabilitation expenditure period,
- 2-year rehabilitation expenditure period for bonds used to provide qualified residential rental projects, and
- Reasonable restoration period for the restoration or replacement of a casualty loss (though the state agency may require a shorter extension).
Other accommodations provided:
- Closed common areas will not reduce eligible basis through the end of 2022,
- Physical inspections are not required until 2023 at the latest, if deemed necessary by the state agency,
- Agencies must give 30 days’ notice for tenant file reviews and physical inspections through the end of 2022,
- QAP hearings may continue to take place by phone, and
- The flexibility allowing for the emergency housing of medical personnel and other essential workers is extended through the end of 2022.
Additionally, the requirements to satisfy occupancy obligations are extended using the following language: “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 December 31, 2022, 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.”