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NHLP’s Comments on the IRS’s proposed changes to the LIHTC program’s Average Income Test (AIT)

NHLP submitted comments on the IRS’s proposed rule that would prohibit owners of LIHTC AIT properties from redesignating a unit’s imputed income limitation. The comment letter advocates for the IRS to give owner’s the ability to re-designate a unit’s imputed income limitation when necessary to comply with fair housing and VAWA obligations and when necessary to accommodate the floating unit designations allowed by other subsidy programs.

The comment letter also explains how owner’s of LIHTC AIT properties have an incentive to rent their very low-income and extremely low-income units to Section 8 voucher holders where the voucher payment standard exceeds the maximum rent allowed under the LIHTC program. This duplicates the LIHTC subsidy for these units, it makes these units unavailable to unassisted prospective tenants, and it gives the owner a windfall well beyond the significant tax credit subsidy already received. In this situation, NHLP proposes that voucher holders be directed to higher tier units when the payment standard exceeds the LIHTC max rent by some percentage.

View NHLP’s comment letter here.