- 6 - Section 424 provides for a low-income housing credit in connection with units or buildings that are part of a low-income housing project. Sec. 42(a), (c)(2). Although section 42 is detailed and complex, generally, to qualify as a low-income housing project, a certain percentage of residential units must be both rent restricted and occupied by tenants whose income is a certain percentage less than the median gross income of the geographical area. Sec. 42(g)(1). With certain limited exceptions not pertinent here, a unit will not qualify as a low- income unit if it is occupied by students. Sec. 42(i)(3)(B)(i), (D). Section 42 provides for the recapture of “excess” low-income housing credits if at the end of any tax year the qualified basis of a low-income housing project building is less than that building’s qualified basis as of the close of the preceding taxable year. Sec. 42(j)(1) and (2). Very generally, qualified basis is the portion of the building’s acquisition cost allocable to low-income units. Recapture is therefore triggered if at the end of any year during the compliance period (a period of 15 years beginning usually when the property is placed in service), the number or size of the units set aside for low-income tenants 4 Unless otherwise indicated, all section references are to the Internal Revenue Code as amended and in effect for the periods under consideration, and all Rule references are to the Tax Court Rules of Practice and Procedure.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011