On May 26, Senators Michael Bennet (D-CO), Todd Young (R-IN), Rob Portman (R-OH), Ron Wyden (D-OR), and Mike Crapo (R-ID) and Representatives Suzan DelBene (D-WA-01), Jackie Walorski (R-IN-02), Donald Beyer (D-VA-08), and Richard Neal (D-MA-01) sent a letter to Treasury Secretary Janet Yellen and IRS Commissioner Charles Rettig urging them to expedite the release of a final rule for the Low-Income Housing Tax Credit (Housing Credit) Average Income Test (AIT). The AIT– sometimes referred to as income averaging – became a third minimum set aside option for Housing Credit properties after its establishment in theConsolidated Appropriations Act, 2018. States have since developed their own policies on AIT, but a final rule to provide official regulatory guidance is urgently needed to implement the AIT more widely across states and better serve communities.
In order to receive tax credits, Housing Credit properties must follow one of three options, called “minimum set asides,” for the percentage of units within a property that are rent restricted for low-income tenants. These are: the 20-50 test, where at least 20 percent of the units are rent restricted and occupied by households with income less than 50 percent of area median gross income (AMGI); the 40-60 test, where at least 40 percent of the units are rent restricted and occupied by households with income less that 60 percent of AMGI; or the AIT. The addition of AIT in 2018 allows Housing Credit properties to serve tenants up to 80 percent of AMGI, as long as the average AMGI within the property is 60 percent or less. As a result of the inclusion of AIT, Housing Credit properties can serve a wider range of low-income tenants.
The bipartisan, bicameral group of lawmakers – who are members of the Senate Finance Committee and House Ways and Means Committee, including Committee Chairmen Wyden and Neal – urged Secretary Yellen to issue a final rule that is both workable and responsive to consensus recommendations from industry stakeholders. The Members of Congress signing the letter expressed their appreciation for the Administration’s commitment to finalize the AIT rule by the end of September in their recent Housing Supply Action Plan. However, the letter’s authors push a step further, urging IRS to issue guidance ahead of that date. The industry applauds these legislators for their support of the release of a final rule that allows the AIT to best benefit individuals and families served by the Housing Credit. We will continue to track the agency’s progress on the forthcoming final rule.
Oklahoma Coalition for Affordable Housing 