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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.

All Tax Credit and Tax Exempt Bond properties in the Virginia Housing portfolio can rely upon the guidance in IRS Notice 2020-53, which provides project owners and Virginia Housing, the monitoring agency, temporary relief of certain program requirements in response to the Coronavirus Disease 2019 (COVID-19).

For additional guidance on tenant compliance and monitoring activities related to COVID-19, see below:

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

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

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

The federal Low-Income Housing Tax Credit (LIHTC) 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 LIHTC by periodically reviewing that qualified units provide safe, decent and affordable housing and that eligible renters occupy these units.

To maintain qualified tax credits, in addition to other program requirements (we strongly encourage owners to review Section 42 of the IRS Code and their Extended Use Agreement for specific eligibility requirements), owners must meet the general guidelines listed below:

Income Restrictions
Tax credit qualification is available only for units rented to low-income occupants. A property must have at least 20% of its low-income units rented to households with incomes of 50% or less than the area median income (AMI) (20-50), at least 40% of the low-income units rented to households with incomes of 60% or less than the AMI (40-60), OR, at least 40% of the low-income units designated by the taxpayer at 20%, 30%, 40%, 50%, 60%, 70%, and 80% with an average of 60% AMI or less (Average Income).

Average Income Minimum Set-Aside
In 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

Rent Restrictions
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.

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

Annual Tax Credit Reporting Process Annual Tax Credit Reporting Process
Current instructions for completing the annual reporting process.

ACH Payment Instructions ACH Payment Instructions

Annual Tax Credit Monitoring Fee Tax Credit Monitoring Fee Multiple Payments Log Sheet

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

 

 

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