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HUD RE-Issues 2013 Income Limits

Yesterday HUD updated the 2013 income limits that were originally posted on 12/4/12. They now have a 12/11/12 effective date. The following note was posted with the MTSP income limit dataset:

"Revised FY 2013 Data Published 12/11/2012, Supersedes Medians and Income Limits Posted on 12/4/2012 for All Areas. In areas where income limits are adjusted (High Housing Cost, Capped, Floored, etc.) no changes to the income limits may be necessary if 12/4/2012 Limits used."

This does change the implementation drop-dead date as Revenue Ruling 94-57 states income limits must be implemented on the effective date or 45 days from the published date and since the re-released limits were published on December 11th, this year's limits must be implemented no later than January 25, 2013**. Click the following to access the revised HUD properties limits and the revised MTSP (Bond & Tax Credit) properties limits.

 

UPDATED 12/19/2012

**IRS Clarifies Proper Implementation of 2013 Income Limits**

After the re-issue, the IRS published their thoughts on the proper use of these limits in their LIHC Newsletter (Issue #50) stating:

"Since the December 11th income limits supersede the income limits released December 4th, the IRS will treat the income limits released December 11th as if they were released on December 4th for all IRC §42 purposes. Rev. Rul. 94-57 provides that taxpayers may rely on the income limits published by HUD until 45 days after HUD releases a new list of income limits, or until HUD’s effective date for the new list, whichever is later. This year, HUD did not include an effective date. Based on the December 4th release date, owners must start using the revised 2013 income limits for all purposes no later than 45 days after the December 4th release date, or January 18th, 2013."

This is different than what I stated above where I used the new publication date of 12/11/12 making the drop dead date to implement the limits January 25, 2013. Instead, please follow the guidance provided by the IRS and be sure to implement your limits no later than January 18, 2013.

Further the IRS also stated in this newsletter...

"Rev. Proc. 94-57 provides that taxpayers may designate the gross rent floor as taking effect on the date the building was placed in service. For buildings placed in service after December 4th, 2012 and before January 18th, 2013, taxpayers may choose to either (1) rely on the 2012 income limits, or (2) rely on the revised 2013 income limits, whichever provides the greater tax benefit. If a taxpayer placed a building in service between December 5th and December 11th (inclusive), 2012 and relied on income limits released by HUD on December 4th, the IRS will honor the designation, but the revised income limit released by HUD on December 11th should be used to calculate the gross rent floor. For more information about “relying” on the income limits, refer to LIHC Newsletters #47 and #48."

After reading this, I began to work closely with the author, Grace Robertson, to clarify this paragraph as it is different than what was stated at this past summer's NCSHA Annual Tax Credit Conference by the IRS officials in attendance. Originally the IRS stated in Issue #48 of their newsletter that owners with properties with a placed in service date during the 45-day grace period, which this year is 12/4/2012 to 1/18/2013, could choose to use the 2012 or 2013 limits based on which provided the greatest tax benefit. But at the 2012 NCSHA Annual Tax Credit conference, the IRS officials in attendance stated the IRS reconsidered that statement and changed it to say the 2012 limits could be used during the grace period if they provided a benefit to the owner but the new limits had to be used, even if lower, when the grace period ended.

After speaking with Ms. Robertson today, I was told the information in the LIHC Newsletter #48 was the information to rely on. To state this in an example, it means if I have a property with its first building PIS on 12/15/2012 (during the grace period but after the re-release of the 2013 income limits), the owner can choose to use the 2012 limits or the 2013 limits that were re-published on 12/11/2012 for BOTH income eligibility purposes and gross rent floor determination... whichever is more beneficial for him. That would mean if the 2012 limits where higher than the newly published 2013 limits, he'd use the 2012 limits for this property.

If that same property had its first building PIS on 12/10/2012 (before the re-publication of the 2013 limits) and had already begun implementation of the new limits, he could continue to use the limits released on 12/4 for income eligibility determinations but would need to base his gross rent floor calculations on the re-released limits released on 12/11/2012. 

It should also be noted, the National Non-Metro Median Gross Income (NNMGI) figure also changed. Previously, it was published as $50,800. It has now been revised to $52,400 changing the 50% NNMGI figures I originally gave you to...

 

1 Person

2 Person

3 Person

4 Person

5 Person

6 Person

7 Person

8 Person

$18,350

$20,950

$23,600

$26,200

$28,300

$30,400

$32,500

$34,600

Remember these limits are used on 9% Tax Credit properties located in a rural area in a state with a state non-metro income limit that is lower than the national or U.S. non-metro limit and for properties allocated GO Zone credits that were placed in service in 2006, 2007 or 2008. The states with lower state non-metro limits are still the 20 previously given reported and include: Alabama, Arizona, Arkansas, Florida, Georgia, Idaho, Kentucky, Louisiana, Michigan, Mississippi, Missouri, New Mexico, North Carolina, Oklahoma, Oregon, South Carolina, Tennessee, Texas, Virginia, and West Virginia.

Once you have retrieved your income limits, use the following table to correctly implement them at each of your properties:

FOR TAX CREDIT/BOND PROJECTS

  • In a HUD Hold Harmless Impacted Area and containing at least 1 building PIS on or before 12/31/08: Use HERA Special Limits unless the new income limits do not contain HERA Special Limits because they were lower than the new regular limits. In these cases, use the regular limits.

  • Containing at least 1 building placed in service after 12/31/08 but before effective date of new limits: Use higher of previous year’s limits and new MTSP Regular Limits.

  • That has at least 1 building placed in service on or after the effective date of the new limits BUT before the end of the 45-day grace period: Use the new MTSP Regular Limits if higher than the previous year’s limits. But if the new limits are lower, use the previous year’s limits. Be sure Gross Rent Floor determination made with limits republished on 12/11 rather than the original limits published on 12/4. (This was changed on 12/27 due to the IRS clarification made in their LIHC Newsletter (Issue 50) that is discussed above.)

  • That has all of its buildings PIS on or after the end of the 45-day grace period: Use the new MTSP Regular Limits.

  • That are 9% rural Tax Credit within a state that has a state non-metro income limit lower than the national non-metro median income: Use NNMGI limit to calculate 50% limits.

  • Allocated GO Zone credits and PIS in 2006, 2007 or 2008: Use NNMGI limit to calculate 50% limits

HUD PROJECTS

  • Property defined as a HUD project: Use HUD dataset

SUBSIDY LAYERED PROJECTS

  • If MTSP project funded with any program basing eligibility on HUD’s income limits: Refer to specific unit funding label and apply the applicable income limit. Example: Mixed-income Tax Credit property with some units labeled as using HOME dataset.

    • Units that are BOTH HOME/MTSP: Use lower of two income limits.

    • Units that are just MTSP: Use MTSP income limits.

    • Units that are just HOME units: Use HOME income limits.

  • Remember: When applying MTSP limits, use the HERA Special limits if property located in an impacted area and PIS before 12/31/08.

  • If property also eligible rural or GO Zone property: Must replace MTSP limits with NNMGI-based limits.

 

 

If you are new to the income limit implementation process or feel you need a refresher, we have an online course available at the Housing Credit Online Training Center titled Housing Credits 205: Income Limits, Rents and Utility Allowances.

  • Register for Housing Credits 205: Income Limits, Rents & Utility Allowances

    • This is one of our many courses available at the Housing Credit Online Training Center and will walk you through all of the new rules surrounding income limits, rents and utility allowances. Remember, these rules significantly changed in 2008, 2009 and 2010.

    • The cost of the course is only $249. But in an effort to help you implement the 2013 income limits, I will reduce the price until January 14, 2013. Your Price: Only $99. Click here to register now!

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