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Low-Income Housing Tax Credit (LIHTC) Compliance

Virginia Housing remains open for business, but working remotely. Our mission is to help all Virginians attain a quality affordable home.

The federal Housing Tax Credit Program is sponsored by the U.S. Treasury Department and administered in Virginia through Virginia Housing. The program is authorized under Section 42 of the Internal Revenue Code of 1986 to encourage development of affordable rental housing by providing property owners with federal income tax credit.

Virginia Housing’s Compliance Department monitors properties that have received tax credits by periodically verifying that qualified units provide safe, decent and affordable housing, and that eligible renters occupy these units.

Tax credit qualification is available only for units rented to households with income under 20%, 30%, 40%, 50%, 60%, 70%, or 80% of area median income published annually by HUD.

Rents on qualified Tax Credit units are restricted. Maximum allowable rent is based on the number of bedrooms and AMI as established annually by HUD. If a household pays for utilities, the maximum rent must be adjusted by the applicable utility allowance.

We strongly encourage owners to review Section 42 and Section 142 of the IRS Code and their Extended Use Agreement for specific eligibility requirements.


IRS Notice 2020-53 COVID-19 Housing Tax Credit Program Relief Expired 12/31/20

IRS Notice 2020-53, published July 1, 2020, provided project owners and Virginia Housing relief from annual recertifications and compliance monitoring activities in response to COVID-19. The relief ended December 31, 2020. Therefore, all Tax Credit and Tax Exempt Bond properties in the Virginia Housing portfolio must complete full annual recertifications, if applicable. Virginia Housing will resume compliance monitoring activities beginning January 1, 2021.

Annual Recertification for 100% Low-Income Properties

Virginia Housing is removing the state requirement for 100% low-income properties to complete the first annual recertification with 3rd party verifications; however, annual verification of household occupancy, full-time student status, confirmation of rent and utility allowances, along with a self- certification of household income must be updated in the HDS NextGen system by the certification effective date for all low-income units in properties with Tax Credits and Tax Credits with Tax Exempt Bonds

Tax Credit and Tax Exempt Bond properties with market units must continue to complete annual recertifications with 3rd party documentation.

Temporary emergency housing is permitted for all Tax Credit and Tax Exempt Bond properties through March 12, 2021, which is 12 months from the date of the Presidential Declaration of federal Disaster. Approval is required from Virginia Housing before providing temporary emergency housing. Please review the Virginia Disaster Relief Guidance and document the tenant file with the Virginia Displaced Household Certification Form.

Updates will be shared on our website and via email to our approved distribution list. Please sign up for our updates here.


Average Income Minimum Set-Aside

March 2018, the "Consolidated Appropriations Act of 2018" established a third minimum set-aside election for new federal housing credit allocations and amended Section 42(g)(1) of the IRS Code of 1986 (which defined a "qualified low-income housing project). The Average Income Minimum Set-Aside election includes new [expanded] income limitations permitted for qualified low-income housing projects at 20%, 30%, 40%, 70%, and 80% AMI. Currently, the HUD published MTSP income limits include 50% and 60% and HERA Special 50% and 60% limits for applicable areas.

For additional information on how to implement Average Income for your project in Virginia, review the Virginia Housing Average Income memo and video playlist with a visual description of Average Income.

VHDA's Average Income Memo Average Income Memo
Virginia Housing’s “Understanding Average Income” Video Playlist "Understanding Average Income” Video Playlist

October 30, 2020, the IRS published a notice of proposed guidance on the Average Income Test (AIT) minimum set-aside. The proposed regulations affect owners of low-income housing projects, tenants in those projects, and Virginia Housing, as the agency which administers the low-income housing tax credit. Public comments can be reviewed on the Federal eRulemaking Portal (reference IRS and REG-104591-18).


Current Tax Credit Compliance forms and documents Tax Credit Forms and Documents 


Annual Tax Credit Reporting Process Annual Tax Credit Reporting Process

Recognizing the impact that COVID-19 has had across the Commonwealth and on our business partners, Compliance & Asset Management will suspend the collection of Tax Credit monitoring fees for the 2020 reporting year. The collection of fees will resume for the 2021 Compliance Monitoring review period.

The Project Information Report (PIR) and the Owner Certification report will be sent to the primary management and owner contacts the first week of April 2021.  The deadline to submit all completed and executed owner reports is June 1, 2021.  Immediately report all changes in property ownership, management agent, and on-site property contacts to your assigned Compliance Officer so we can update our recrods before the packets are distributed.

Utility Allowance Estimates

Before using any utility allowance schedules posted on Virginia Housing's website, please ensure that your local PHA has adopted Virginia Housing utility allowances for use or that your only local PHA is a Virginia Housing administered program agency.  Detailed information may be found in the documents below.

  
  
  
90DayNoticetoResidents-Sample.doc90 Day Notice to Residents - Sample11/7/2016
IRS-2008-UA-Reg-Update.pdfIRS 2008 Utility Allowance Federal Register Regulation11/4/2016
IRS-2009-UA-Reg-Update.pdfIRS 2009 Utility Allowance Federal Register Regulation11/3/2016
IRS-2016-UA-Reg-Update.pdfIRS 2016 Utility Allowance Federal Register Regulation11/2/2016
IRS-2019-UA-Regulation-Update.pdfIRS 2019 Utility Allowance Federal Register Regulation12/20/2019
Bldg-by-Bldg-UAE-Spreadsheet.xlsxUtility Allowance Estimates by BIN Number Spreadsheet12/20/2019
VHDA-UA-Certification.pdfVirginia Housing Utility Allowance Certification form effective March 1, 202012/20/2019
VHDA-UA-Options-Procedures.pdfVirginia Housing Utility Allowance Options and Procedures effective March 1, 202012/20/2019


Archived 2020 COVID-19 Guidance 

Previous Virginia Housing guidance on tenant compliance and monitoring activities related to COVID-19 below:

VHDA's Average Income MemoCOVID-19 Compliance Monitoring Guidance for Owners and Management Agents

VHDA's Average Income MemoVirginia Housing COVID-19 Compliance Monitoring Activities

VHDA's Average Income MemoCOVID-19 Compliance & Asset Management Email Questions and Answers

 

NOTE: You will need Adobe’s Acrobat Reader (.pdf), and/or Microsoft Office Software in order to view some of the documents on this page.