Low-Income Housing Inflation Adjustments for 2022

On November 10, 2021, IRS issued Revenue Procedure 2021-45 which included a few provisions related to Section 42 low-income housing tax credits.

Minimum Rehabilitation Expenditures for Low-Income Housing Units in 2022

The minimum rehabilitation expenditures per low-income housing unit for calendar year 2022 is $7,400. This is the minimum per unit cost to meet the substantial rehabilitation test.

2022 Per Capita Ceiling For 9% Credit

The state housing credit ceiling for the low-income housing credit for calendar year 2022 is the greater of 1) $2.60 multiplied by the state population or 2) $2,975,000. Based on 2021 Calendar Year Resident Population Figures from IRS Notice 2021-19, which showed Minnesota’s population at 5,657,342, Minnesota’s 2022 housing credit ceiling would be around $14,709,000. This is down from 2021 which was $2.8125 per capita or $15,911,274.

2022 Per Capita Ceiling For PAB Volume Cap

The amounts used under Section 146(d) to calculate the state ceiling for the volume cap for private activity bonds for calendar year 2022 is the greater of 1) $110 multiplied by the state population or 2) 335,115,000. Based on Minnesota’s population from IRS Notice 2021-19, the 2022 volume cap for private activity bond ceiling would be $622,307,620. The $110 per capita is the same as in 2021.

I believe that there will be an increase in competition for 2022 low-income housing tax credits (both 9% and 4%) with the decrease in the 9% ceiling and no increase in the private activity bonds.

For additional information or assistance with your project contact Donna Stevermer, CPA, Partner or our Real Estate Solutions Team at Mahoney.