IRS to Hold Hearing on Average Income Test

On March 24, the IRS will hold a hearing on its proposed rule to implement the Average Income Test (AIT) for the Low-Income Housing Tax Credit (Housing Credit) program. To qualify as a Housing Credit project, an owner must provide a minimum number of affordable units in each property, referred to as a “minimum set-aside.” There are three minimum-set aside options for owners to choose from: 20 percent of units for households with an income of 50 percent or less of the area median income (AMI); 40 percent of units for households with an income of 60 percent or less of AMI; or 40 percent of units with the flexibility to serve households earning as much as 80 percent AMI, so long as the average income in the property is 60 percent or less of AMI. This third, flexible option – the AIT – allows Housing Credit properties the flexibility to provide deeper affordability, particularly for families earning 40 percent or less of AMI.

The AIT was included as a new minimum set-aside option in the publichearings by March 5.

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