On February 20, 2024, the United States Tax Court 162 T.C. 3 held in favor of the taxpayer and concluded that tax-exempt bond issuance and related financing costs incurred in connection with the development of Low-Income Housing Tax Credit (LIHTC) properties that are allocable to the construction period, are costs of a nature that would be included in LIHTC eligible basis.

Prior to this court case, the IRS issued Technical Advice Memorandum 200043015 in 2000 which concluded that tax-exempt bond issuance costs were not to be included in eligible basis for the Low-Income Housing Tax Credit. Tax practitioners and housing agencies have generally followed this guidance since it was issued.  

This should not be taken as a legal or tax opinion. However, this court case may provide support for including these costs in eligible basis. You should consult your tax counsel and tax advisors regarding how this may impact your properties.
 

Published: 04/01/2024

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