• About Us
  • Our Team
    • Leadership
    • Company Directory
  • Industries
    • Closely Held Businesses
    • Not-For-Profits
    • Real Estate
      • Affordable Housing
      • Commercial Real Estate
      • Tax Credits and Incentives
        • Historic Tax Credits
        • Low-Income Housing Tax Credits
  • Services
    • Accounting Services
      • Outsourced Accounting Services
      • Bookkeeping
      • Training and Consulting
      • Accounting System Consulting
    • Assurance
      • Audit, Review, Compilation
      • Agreed-Upon Procedures
      • Employee Benefit Plans
    • Consulting Services
      • Internal Controls
      • Management Assistance
    • Tax
      • Business Tax
      • Individual Tax
      • State and Local Tax
      • Estate and Trust Planning
      • Business Valuation
    • Mahoney Development Services, LLC
  • Resources
    • Accounting and Tax Resources
    • Real Estate Resources
      • REST Easy with Mahoney December 2022
      • REST Easy with Mahoney October 2022
      • REST Easy with Mahoney July 2022
    • Blog
    • Peer Review
  • Careers
    • DEIB/Community
    • Current Openings
    • Internships
  • 651.227.6695
  • info@mahoneycpa.com
  • Client Portal
  • Remote Assistance
  • Payment
CONTACT
Mahoney CPAS logo
  • About Us
  • Our Team
    • Leadership
    • Company Directory
  • Industries
    • Closely Held Businesses
    • Not-For-Profits
    • Real Estate
      • Affordable Housing
      • Commercial Real Estate
      • Tax Credits and Incentives
        • Historic Tax Credits
        • Low-Income Housing Tax Credits
  • Services
    • Accounting Services
      • Outsourced Accounting Services
      • Bookkeeping
      • Training and Consulting
      • Accounting System Consulting
    • Assurance
      • Audit, Review, Compilation
      • Agreed-Upon Procedures
      • Employee Benefit Plans
    • Consulting Services
      • Internal Controls
      • Management Assistance
    • Tax
      • Business Tax
      • Individual Tax
      • State and Local Tax
      • Estate and Trust Planning
      • Business Valuation
    • Mahoney Development Services, LLC
  • Resources
    • Accounting and Tax Resources
    • Real Estate Resources
      • REST Easy with Mahoney December 2022
      • REST Easy with Mahoney October 2022
      • REST Easy with Mahoney July 2022
    • Blog
    • Peer Review
  • Careers
    • DEIB/Community
    • Current Openings
    • Internships
Facebook
Twitter
Linkedin

Mahoney logo transverse
  • About Us
  • Our Team
    • Leadership
    • Company Directory
  • Industries
    • Closely Held Businesses
    • Not-For-Profits
    • Real Estate
      • Affordable Housing
      • Commercial Real Estate
      • Tax Credits and Incentives
        • Historic Tax Credits
        • Low-Income Housing Tax Credits
  • Services
    • Accounting Services
      • Outsourced Accounting Services
      • Bookkeeping
      • Training and Consulting
      • Accounting System Consulting
    • Assurance
      • Audit, Review, Compilation
      • Agreed-Upon Procedures
      • Employee Benefit Plans
    • Consulting Services
      • Internal Controls
      • Management Assistance
    • Tax
      • Business Tax
      • Individual Tax
      • State and Local Tax
      • Estate and Trust Planning
      • Business Valuation
    • Mahoney Development Services, LLC
  • Resources
    • Accounting and Tax Resources
    • Real Estate Resources
      • REST Easy with Mahoney December 2022
      • REST Easy with Mahoney October 2022
      • REST Easy with Mahoney July 2022
    • Blog
    • Peer Review
  • Careers
    • DEIB/Community
    • Current Openings
    • Internships
Facebook
Twitter
Linkedin

REST Easy with Mahoney July 2022

Important News for the Affordable Housing Industry

AFR

Upcoming Deadlines

Legislative Updates

Accordion #2
AFR Index

Index of Applicable Federal Rates

AFR Rates for July 2022

Applicable Federal Rates for July 2022       

  Annual Monthly
Short-term 2.37% 2.35%
Mid-term 2.99% 2.95%
Long-term 3.22% 3.17%
AFR Rates for August 2022

Applicable Federal Rates for August 2022  

 AnnualMonthly
Short-term2.88%2.84%
Mid-term3.15%3.11%
Long-term3.35%3.30%
Accordion #1
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.
Application Deadlines and 8609 Packages
Low Income Housing 9%
Round 1 Common Applications

Minnesota Housing                                            Dakota County CDA                                            Washington County CDA         7/14/2022                                                                                  City of Minneapolis                   7/21/2022                                                                                      City of St. Paul                           8/2/2022

LCDA and TOD funding            8/15/2022

If you have not submitted your 8609 package please do so as soon as possible to ensure receipt of Form 8609 by the 9-15-22 tax return due date if claiming credit in 2021.

Ensure your buildings were leased-up by 6-30-22 if you are taking advantage of IRS Notice 2022-5 for taking credits in 2021 

Accordion #1
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.
Federal Legislation
Federal Legislation Updates                                        
by: Alex Cho
 
On May 16, 2022, President Biden released a Housing Supply Action Plan. The Housing Supply Action Plan’s goal is to close the housing shortage gap in five years. 
 
The Plan includes the following actions:
 
  • Financial incentives to state and local governments to remove exclusionary land use and zoning constraints that limit the development of high-density housing.                                                       
  • New federal financing tools for buyers and manufacturers of manufactured housing.                                                                
  • Expansion of LIHTC and the creation of Neighborhood Homes Tax Credit.                        
  • Reducing finance risks (interest rate risk, loan resizing risk, etc.) and transaction costs by providing a single construction to permanent multifamily loan to multifamily housing developers.                                                                                       
  • Use of American Rescue Plan’s State and Local Fiscal Recovery Funds to support development of multi-family or single-family affordable housing, preservation of existing affordable housing, permanent supportive housing, and rental subsidies.                           
  • Increase equity investment in LIHTC deals by Fannie Mae and Freddie Mac.                                                                                               
  • Harmonization of federal fund requirements across different programs.                                                                                                    
  • Finalize Income Average regulations by the end of September 2022.

On May 26, 2022, Congressional leaders submitted a letter to the IRS and Treasury to finalize the average income test rule. They urged them to ensure that the final rule is user friendly to help support affordable housing.

Minnesota Legislation
Minnesota Legislation Updates 
by: Alex Cho

On January 18, 2022, Governor Walz released a $2.734 billion bonding bill. 

His bill includes $250 million in Housing Infrastructure bonds which would be awarded to for-profit developers, non-profit developers, Indian Tribes or tribal housing corporations, and local units of government for supportive housing, preservation, senior housing, single family development, and manufactured home communities.
 
Current (June 13, 2022) Regular session ended on May 23rd without finalizing the bonding bill. No special session has been called, yet. 

Extended IRS Tax Deadlines for Qualified Low-Income Buildings

by Mary Corwin

Qualified low-income buildings must comply with a number of tax deadlines. However, during a federally declared disaster many of these deadlines may be extended by the IRS. A federal disaster was declared on March 13, 2020 which provided relief from tax deadlines to Americans who have been adversely affected by the COVID-19 emergency. What are the IRS deadline extensions and how do they affect me?

Accordion #1
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.
IRS Extension Deadlines

EXTENDED DEADLINES                                                                                                                                                                                                                      10% Test for Carryover Allocation § 42(h)(1)(E)(ii)

                             Original DeadlineExtended Deadline
Timeframe  1On or after 4/1/2020 and on or before 12/31/2020

Original deadline plus 2 years

Timeframe 2On or after 1/1/2021 and on or before 12/31/202212/31/2022

§42(e) 24 Month Minimum Rehabilitation Expenditure Period § 42(e)(3)(A)(ii)

 Original DeadlineExtended Deadline
Timeframe 1On or after 4/1/2020 and on or before 12/31/2021Original Deadline plus 18 months
Timeframe 2On or after 1/1/2022 and on or before 6/30/20226/30/2023
Timeframe 3On or after 7/1/2022 and on or before 12/31/2022Original Deadline plus 12 months
Timeframe 4On or after 1/1/2023 and on or before 12/30/202312/31/2023

Placed in Service Deadline 42(h)(1)(E)(i)

 Original DeadlineExtended Deadline
Timeframe 112/31/202012/31/2022
Timeframe 212/31/2021, 10% original deadline before 4/1/202012/31/2022
Timeframe 312/31/2021, 10% original deadline after 4/1/2020 and before 12/31/202012/31/2023
Timeframe 412/31/2022, 10% original deadline in 202112/31/2023

Reasonable Period for Restoration or Replacement in the Event of Casualty Loss § 42(j)(4)(E)

 Original DeadlineExtended Deadline
Timeframe 1Original Reasonable Restoration Period ends on or after 4/1/202018 months after 4/1/2020 but not beyond 12/31/2022
Notes

*** The Housing Agency may require a shorter extension, or no extension at all

 

Extension to Satisfy Occupancy Obligations § 42(f)(3)(A)(ii)

 Original DeadlineExtended Deadline
Timeframe 112/31/20206/30/2021
Timeframe 212/31/20216/30/2022
Timeframe 312/31/20226/30/2023

If your development is projected to finish lease-up in early 2023, you may be able to use this relief to take credits early in 2022.

Correction Period § 1.42-5

 Original DeadlineExtended Deadline
Timeframe 1On or after 4/1/2020 and on or before 12/31/2021Extended by a year, but not beyond 12/31/2022
Notes

*** The Housing Agency may require a shorter extension, or no extension at all

 

OPERATIONAL WAIVERS

Compliance Monitoring – Review of Tenant Files

 Requirement on HoldResume Requirement
Review of Tenant Files4/1/2020 through 12/31/20211/1/2022
Reasonable Notice under § 1.42-5(c)(2)(iii)(C)(3)4/1/2020 through 12/31/20221/1/2023

Compliance Monitoring – Physical Inspections

 Requirement on HoldResume Requirement
Physical Inspections4/1/2020 through 6/30/20227/1/2022
Reasonable Notice under § 1.42-5(c)(2)(iii)(C)(3)4/1/2020 through 12/31/20221/1/2023

Common Areas and Amenities

 Requirement on HoldResume Requirement
Physical Inspections4/1/2020 through 12/31/20221/1/2023
Notes***Must be in response to the COVID-19 pandemic and not other noncompliance with § 42 

For questions on how the extensions in Notice 2022-05 affects your LIHTC or tax-exempt bond property, please contact the Real Estate Solutions Team at Mahoney.

Qualifying Tenants in Place on the Acquisition Date for Acquisition/Rehab Projects
 
by Mary Corwin

Your project received an allocation of tax credits that you plan to use to rehabilitate an existing building. What should you be thinking about from the compliance angle? Can the in place tenants qualify the units for tax credits?

Accordion #1
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.
Qualifying Scenarios

Here are some dates we will use in below examples:

  • Acquisition date is June 1, 2020
  • Rehab placed in service date is April 30, 2021
  • Household A moved in on May 1, 2020
  • Household B moved in on June 1, 2015

When a building is purchased and operating with tenants currently living in it, the building is ready for its intended purpose and the acquisition date becomes the date tax credits can begin. Using our example dates, tax credits could begin June 1, 2020. However, if the rehabilitation is not complete until 2021, the acquisition credits are deferred one year. In this case both acquisition and rehab credits will begin in 2021 and any tenant qualified up until January 31, 2021 will have credits on that unit for the entire year of 2021.

When you purchase an existing building, most of the units will be occupied. For all occupied units, the owner has 120 days before and after the acquisition date to complete tenant income certifications. If completed within the 120 days, the units will be income certified as of the acquisition date. 

There are a couple of rules that apply to income certifications for acq/rehab deals – typically called the “Safe Harbor” and “Grandfathering.”

Safe Harbor Rule

What happens if you purchase an existing building in 2020 and a household’s income goes over the income limit by the first year of the credit period (2021)? Do you have to evict that household? Thanks to IRS Revenue Procedure 2003-82 the answer is no.

If Household A’s income was certified and below the income limit as of June 1, 2020, but it increased in December 2020 above the income limit, that household would still be considered a low-income unit as of the first year of the credit period, 2021, as long as the rent is properly restricted. If the household is over the income limit, the next available unit rule is applied.

Grandfathered Tenants

What happens with household in place on the acquisition date if the existing building you purchased was previously a tax credit project and you plan to rehabilitate the project using a new allocation of LIHTCs, also known as a re-syndication?

In this case, the 8823 Guide states that “Households determined to be income-qualified for purposes of the IRC §42 credit during the 15-year compliance period are concurrently income-qualified households for purposes of the +30-year extended use agreement. As a result, any household determined to be income qualified at the time of move-in for purpose of the extended use agreement is a qualified low-income household for any subsequent allocation of IRC §42 credit.”

This means that Household B would be “grandfathered in” (qualified unit) even if they are over the income limit as the new acquisition date. If Household B was over the income limit, the household could remain in its unit, but would be subject to the next available unit rule. 

A couple of caveats: 

First, it should be noted that in the case of a re-syndication, some investors or state agencies do not follow this rule and may still require an owner to prepare new income certifications for all existing tenants. 

Second, an owner will most likely have to test each household for student status, as the state agency may not have required that during the extended use period.

 
 What’s Happening at MDS?
by Andy Hughes 
   
Mahoney Development Services, LLC (MDS), an affiliate of Mahoney assists Real Estate Developers and Investors with consulting and advisory services to manage the busy development projects in their Real Estate portfolio. See below for what’s going on at MDS. 
Application Season!
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.
It's Application Season!
It’s Application Season!

MDS is gearing up for a busy application season, with applications planned for projects to Minnesota Housing and various other project funders in July and August for tax credits, deferred loans and other resources.  MDS is working with a number of clients on a diverse set of projects, including existing acquisition/rehabilitation and new construction projects in the Metro and Greater Minnesota.                                                                                                                                            Outside of the busy application season submittals, MDS continues to work on other projects include refinances, project financial underwriting and due diligence and other activities for clients.   

MDS Hiring News
MDS Hiring News          

MDS is also pleased to announce its recent hiring of a real estate project management intern!  Kimmy Kistan started at MDS in early June and will assist in preparing financing applications, project due diligence and reviewing new opportunities.  Kimmy is a local college student and will work at MDS full-time through the summer.            

If you would like more information about MDS and its services, please contact Andy Hughes at MDS.  

Close up of Minnehaha Falls, Minneapolis

Real Estate Solutions Team

Employee Spotlight

by Anjelica Smith 
 
Hi, my name is Anjelica Smith, and I am thrilled to share a little bit about myself with you. I moved from a small city in Michigan to the Twin Cities in November of last year with my boyfriend, Mackenzie, and our dog, Apollo.                                 
Accordion #1
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.
Learn More About Anjelica

I started an internship in January 2022 with Mahoney and their Real Estate Solutions Team. I learned so much about low-income housing and enjoyed doing so. After the internship was over, I accepted a full-time position as an Associate Accountant with the same team. I will be graduating with a Master of Science in Accounting from the University of Michigan in August of 2022. I will begin studying for the CPA exam a little before I graduate in June.                                                                                                             
Now that the weather has warmed up, we really enjoy being outside. Whether we are out on the lake soaking up the sun or at the dog park watching our dog roll in the mud. We recently walked the trails around Minnehaha Falls. It was gorgeous and an enjoyable walk. I am excited to explore more of the Twin Cities this summer. 

* Photo credit in this section to Anjelica Smith 

Out and About

with The Real Estate Solutions Team

     by Deanne Thompson

The Real Estate Solutions Team at Mahoney has been out and about attending various affordable housing events in our community. Please take a look and see where we have been recently.      

MN Affordable Housing Summit - Minneapolis

Members of the Real Estate Solutions, Tax and MDS teams attended the summit recently. This was an impactful opportunity to focus on current topics affecting developers and investors in the real estate community. 

Minnesota Affordable Housing Summit - Minneapolis

Members of the Real Estate Solutions, Tax and MDS teams attended the summit recently. This was an impactful opportunity to focus on current topics affecting developers and investors in the affordable housing community. 

Project for Pride In Living Inc. Breakfast - Minneapolis

Assurance and Real Estate Solutions Team members attended an early breakfast for Project for Pride in Living Inc. This was a terrific way to support the important mission and impact this provider of affordable housing has on our local community.

Verdant Grand Opening - St. Paul

Real Estate Solutions Team members had a chance to tour this wonderful new affordable housing project in St. Paul.

Elliot Twins Apartments Open House - Minneapolis

Real Estate Solutions Team Partner Tom Johnson attended the open house for the rehabilitated Elliot Twins Apartments complex in Minneapolis in June 2022.

This rehabilitation project has helped it’s residents by adding new windows, air conditioning, energy efficient roofing, HVAC and a connection area between the two buildings. 

* Photo credit to Tom Johnson

Women's Affordable Housing Network Event - Minneapolis

Members of the Real Estate Solutions and Tax teams attended this inaugural event in June 2022 to network and learn about how to develop and empower women working in the affordable housing industry. 

NCSHA 2022 Housing Credit Connect Event - Chicago

Members of the Real Estate Solutions team at Mahoney attended the National Council of State Housing Agencies (NCSHA) 2022 Housing Credit Connect Event in June 2022 in Chicago, Illinois. 

This was an opportunity for state housing credit allocating agencies to meet with others working in the affordable housing Industry. Mahoney Real Estate Solutions and Tax team members shown above attended workshops to learn about the latest industry news regarding state tax credits, and had the opportunity to network with many housing agencies and other industry leaders in their field. 

* Photo credit to Tom Johnson

INDUSTRIES

Closely Held Businesses
Not-For-Profits
Real Estate

SERVICES

Accounting Services
Assurance
Consulting Services
Tax

ADDRESS

10 River Park Plaza, Suite 800
Saint Paul, MN 55107
(651) 227.6695
Fax: (651) 227.9796
info@mahoneycpa.com

Be the Next logo
Facebook
Twitter
Linkedin

© 2022 Mahoney | Privacy Policy

Mahoney Ulbrich Christiansen & Russ, PA