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Unit Transfers

Posted on: August 8th, 2018 by Christa Landram 1 Comment

Anyone who participates in the affordable housing industry has dealt with or will deal with a transfer(s) at some point in the affordability period. It is crucial to understand the different rules pertaining to transfers. To help compartmentalize the various rules, we will break it down by funding source.

LIHTC/HC
With LIHTC, the owners must know whether the building is part of a multiple building project or a single building project.
Note – building election can be found on Form 8609, Line 8b.

Each Building is a Project:
Transfer between buildings: If the owner chose each building to be a project, then each building is treated as a separate project. This means that Initial Certifications must precede transfers between buildings or “projects,” and the household requesting a transfer to a different building is treated as a new move-in. This means the household must meet the applicable income limit.

Transfers within the same building – 100% Low-income: households can transfer within the same building without having to test their income because, per IRS regulations, they do not have to conduct recertifications and at initial they were presumably under the applicable income limit.

Transfers within the same building – Mixed Income: transfers can take place within the same building, but income should be “tested” to see if the household exceeds 140%. If the household does exceed 140% of the applicable AMI, then the household can still transfer, but to maintain compliance, the Next Available Unit Rule (NAUR) will need to be invoked.

Multiple Building Project:
100% Low-income: households can transfer within buildings and between buildings without having to test their income because, by IRS regulations, they do not have to conduct recertifications and at initial they were presumably under the applicable income limit. Even though Florida Housing conducts one annual recertification for these projects, they still do not prohibit transfers between buildings, even when a household exceeds 140%.

Mixed-income – transfers within the same building: transfers can take place within the same building, but income should be “tested” to see if the household exceeds 140%. If the household does exceed 140% of the applicable AMI, then the household can still transfer, but to maintain compliance, the NAUR will need to be invoked.

Mixed-Income – transfers between buildings: income must be tested to see if the household exceeds 140% of the applicable AMI. If it does, then the household cannot transfer. If the household does not, then the household is permitted to transfer.

MMRB
NOTE: following is a Florida Housing rule. Please check with your bond issuer to see if they follow the same principles.

When a property is combined with MMRB/SAIL, the HC rule applies. The IRS states that when a property is 100% low-income, annual recertifications do not have to be conducted and transfers can take place without restriction.

When it is not combined with HC, but is still 100% low-income, the same rule applies (see LIHTC/HC rules above).

When a project is not 100% low-income, all transfers must be treated as new move-ins and the entire initial certification process must be completed.

SAIL
The SAIL definition of very low-income indicates that when a property is combined with HC/SAIL, the HC rule applies.

The IRS states that when a property is 100% low-income, annual recertifications do not have to be conducted and transfers can take place without restriction.

When it is not combined with HC, but still 100% low-income, the same rule applies (see LIHTC HC rules above).

When a project is not 100%, all transfers must be treated as new move-ins and the entire initial certification process must be completed.

HOME
Under HOME, the transfer rule is slightly ambiguous, and it is important to inquire how to do all transfers with the PJ (Participating Jurisdiction) or the Program Administrator. Many administrators require the household to be treated as a new move-in before conducting the transfer. Transfers are often done at lease renewal. To accommodate appropriate occupancy, an owner should complete the entire certification process to ensure the current household and associated income has been captured. At all times, the unit mix must be maintained.

 


One Response

  1. Thanks for spreading light on this serious issue.andy kaufman character tony

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