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Focus On Real Estate: JUST RELEASED! Guidance On Section 1602, Low Income Housing Tax Credits

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The IRS has just released Notice 2010-18 related to Section 1602 of the American Recovery and Reinvestment Act of 2009.
March 26, 2010

The IRS has just released Notice 2010-18 related to Section 1602 of the American Recovery and Reinvestment Act of 2009.

Section 1602, also known as the “exchange program,” evolved from the American Recovery and Reinvestment Act of 2009 (ARRA). It provides grants to states for low-income housing projects in lieu of housing credits.

Section 1602 allowed eligible state housing credit agencies to exchange up to 40 percent of a state’s low-income housing tax credit (LIHTC) ceiling and 100 percent of certain LIHTCs carried forward for cash to finance qualified low-income buildings.

Today, the IRS released Notice 2010-18, which provides guidance on Section 1602.

This notice:

  • Clarifies the methods for state agencies to calculate the effect of Section 1602 grants on LIHTC allocations and methods for tracking.
  • Refers to the legislative history of ARRA and states that Section 1602 grants are not includable in income of recipients of subawards.
  • Provides guidance on subawards under section 1602, which do not reduce eligible basis or depreciable basis.

     

    Under U.S. Treasury Department guidelines, we hereby inform you that any tax advice contained in this communication is not intended or written to be used, and cannot be used by you for the purpose of avoiding penalties that may be imposed on you by the Internal Revenue Service, or for the purpose of promoting, marketing or recommending to another party any transaction or matter addressed within this tax advice. Further, RubinBrown LLP imposes no limitation on any recipient of this tax advice on the disclosure of the tax treatment or tax strategies or tax structuring described herein.

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