When LIHTC Income Limits Decrease

Written by Lois Churchill, Spectrum Enterprises

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HUD published the 2013 income limits, effective 12/1/12. For tax credit properties the new limits must be put into use within 45 days, or no later than 1/14/13.

As in the past there are some MSA or county areas where income limits have decreased for the first time so there is the usual confusion regarding whether or not properties must lower their income limits. They do not!

When limits decrease for an MSA or county, use whatever limits were used last year. If you look at the MTSP page for the specific county, you may note two or three different things below the income limit chart(s).

Boston, MA for example: There are two separate income charts, a hold harmless chart and the new 2013 limits. Below these charts is another one where it is specified what limits are to be used by properties. That chart says that if the property placed in service on or before 12/31/08 the correct income chart is the higher one. For properties that placed in service from 1/1/09 through 11/30/12 the correct income chart is last year’s chart (2012 limits). For new properties placing in service from 12/1/12 until the next set of limits is published the correct limits are the 2013 limits.

Here’s another example. Springfield MA has had limits go down for the first time in 2013. So if the property placed in service any time prior to 12/1/12 the correct limits are the 2012 limits. Only new properties placing in service 12/1/12 must use the lower limits for tax credit qualification.

Now, if your property also has HOME funds it’s a different story. When HOME income limits for 2013 are published (and they haven’t been yet), if those go down owners of HOME properties must use the lower limits going forward – but even then rents don’t have to be lowered!

Hopefully this helps with the confusion for those of you facing lower income limits for the first time.

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