Dear development community,
On February 20, 2024, the United States Tax Court ruled on a case between 23rd Chelsea Associates and the Internal Revenue Service. The case challenged common practice and understanding regarding the generation of Low-Income Housing Tax Credit (LIHTC) eligible basis. Commonly, the costs associated with conduit bond issuance to build a Qualified Residential Rental Project had not been allowed to generate the eligible basis for the computation of tax credits.
The court’s ruling has been understood by industry professionals to signal the ability of tax credit allocation agencies to accept the inclusion of those costs within the calculation of eligible basis. Oregon Housing and Community Services (OHCS) agrees that the court decision affirms this interpretation.
However, given that the regulatory body, the Internal Revenue Service (IRS), could appeal the court’s decision, OHCS is aligning the implementation of this new code interpretation for when the opportunity to challenge the decision has closed. Assuming the IRS does not challenge the decision, OHCS will align the LIHTC program with the court’s decision and begin to allow the new interpretation to take effect on June 21, 2024. If the IRS does challenge the ruling, implementing this interpretation will be delayed until a final decision on this matter has been made.
Partners interested in IRS Form 8609:Low-Income Housing Credit Allocation and Certification issuances reflective of the inclusion of bond issuance fees should follow the directions below:
