On January 10, the IRS issued Notice 2022-05 on the Low Income Housing Tax Credit program to extend previous relief for the 10% test for carryover allocations, the 24-month minimum rehabilitation period, the placed-in-service deadline, and other extensions related review of tenant files, physical inspections, and closure of common areas.

The Notice extends the 10% test for carryover allocations. If the original deadline for an owner of a building with a carryover allocation to meet the 10% test is on or after April 1, 2020, and on or before December 31, 2020, the deadline is extended to the original deadline plus two years. If the original deadline is on or after January 1, 2021, and before December 31, 2022, the deadline is extended to December 31, 2022

The Notice extends the 24-month minimum rehabilitation expenditure period. If the original deadline for the 24-month minimum rehabilitation expenditure period for a building originally is on or after April 1, 2020, and is on or before December 31, 2021, then that deadline is extended to the original date plus 18 months. If the original deadline for this requirement is on or after January 1, 2022, and on or before June 30, 2022, then that deadline is extended to June 30, 2023. If the original deadline for this requirement is on or after July 1, 2022, and on or before December 31, 2022, then that deadline is extended to the original date plus 12 months. If the original deadline for this requirement is on or after January 1, 2023, and on or before December 30, 2023, then that deadline is extended to December 31, 2023.

The Notice extends the place in service deadline. If the original deadline for a building to be placed in service is the close of calendar year 2020, the new deadline is December 31, 2022. If the original placed-in-service deadline is the close of calendar year 2021 and the original deadline for the 10% test was before April 1, 2020, the new placed-in-service deadline is December 31, 2022. If the original placed-in-service deadline is the close of calendar year 2021 and the original deadline for the 10% test was on or after April 1, 2020, and on or before December 31, 2020, then the new placed-in service deadline is December 31, 2023. If the original placed-in-service deadline is the close of calendar year 2022 (and thus the original deadline for the 10% test was in 2021), then the new placed-in-service deadline is December 31, 2023.

The new notice also allows state agencies to delay compliance-monitoring physical inspections through the end of 2022 and enables state agencies to continue offering 30-day notices for reviewing tenants’ files through the end of 2022.

The Notice extends the ability for temporary full or partial unavailability or closure of an amenity or common area in a low-income building or project without a reduction in eligible basis from April 1, 2020, to December 31, 2020. The Notices allows state housing finance agencies to deny the use of this extension based on public health criteria or limit / condition it (for example, a housing a finance agency may apply the waiver to waiver to access an amenity or common area that is limited to persons wearing masks or to persons fully vaccinated against COVID-19.)

Read the IRS Notice 2022-05.