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."
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
limits and the revised
MTSP (Bond &
Tax Credit) properties limits.
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
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...
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
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.
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
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
HUD Hold Harmless Impacted Area and containing at least 1 building
PIS on or before 12/31/08:
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.
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
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.
changed on 12/27 due to the IRS clarification made in their LIHC
Newsletter (Issue 50) that is discussed above.)
has all of its buildings PIS on or after the end of the 45-day
Use the new
MTSP Regular Limits.
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:
limit to calculate 50% limits
SUBSIDY LAYERED PROJECTS
MTSP project funded with any program basing eligibility on HUD’s
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:
MTSP limits, use the HERA Special limits if property located in an
impacted area and PIS before 12/31/08.
property also eligible rural or GO Zone property:
MTSP limits with NNMGI-based limits.
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.