HCCP HCCP Annual Certification Procedures 2 — Questions and Answers
Question 1: Under the 'available unit rule,' what must a LIHTC owner do when a tenant's income rises above 140% of the applicable income limit?
- Rent the next available unit of comparable or smaller size to an income-qualified household (Correct answer)
- Evict the over-income tenant within 30 days
- Reduce rent for the over-income tenant to offset their income increase
- File a waiver request with the IRS
Correct answer: Rent the next available unit of comparable or smaller size to an income-qualified household
When a tenant's income exceeds 140% of the applicable limit, the next available comparable unit must be rented to an income-qualified tenant to maintain the set-aside.
Question 2: What documentation must LIHTC owners retain for each tenant to support annual compliance certifications?
- Tenant Income Certification, verifications of income and assets, and student status documentation (Correct answer)
- Only the original lease agreement
- Bank statements going back five years for each household member
- A credit report updated annually
Correct answer: Tenant Income Certification, verifications of income and assets, and student status documentation
Owners must retain the Tenant Income Certification along with third-party income and asset verifications and student status documentation for each household.
Question 3: In a LIHTC project using the income-averaging set-aside election, what is the minimum average AMI percentage that must be maintained across designated units?
- 60% of AMI (Correct answer)
- 50% of AMI
- 80% of AMI
- 70% of AMI
Correct answer: 60% of AMI
Under the income-averaging election, the average income limit across all designated units must be 60% of AMI or less, with individual units ranging from 20% to 80% of AMI.
Question 4: What is the consequence of an owner failing to conduct required tenant annual recertifications?
- The affected units may be treated as noncompliant and reported to the IRS on Form 8823 (Correct answer)
- Tenants are automatically evicted for noncompliance
- The owner forfeits only the current year's tax credits
- The state agency assumes responsibility for conducting the recertification
Correct answer: The affected units may be treated as noncompliant and reported to the IRS on Form 8823
Failure to complete required annual recertifications is a compliance violation that the state agency must report to the IRS using Form 8823.
Question 5: How long must LIHTC owners retain tenant files and compliance records after the end of the compliance period?
- At least 6 years after the due date of the owner's tax return for the last year of the compliance period (Correct answer)
- 3 years after the tenant vacates the unit
- Until the building is sold or transferred
- 10 years from the placed-in-service date
Correct answer: At least 6 years after the due date of the owner's tax return for the last year of the compliance period
IRS rules require LIHTC owners to retain compliance records for at least 6 years after the due date of the owner's federal tax return for the last year of the compliance period.
Question 6: What is the primary purpose of a Tenant Income Certification (TIC) in the LIHTC program?
- To document and certify that a household's income qualifies them for a low-income unit at move-in and at recertification (Correct answer)
- To authorize a rent increase for the tenant
- To report tenant income to the IRS directly
- To establish the fair market rent for the unit
Correct answer: To document and certify that a household's income qualifies them for a low-income unit at move-in and at recertification
The TIC is the official document used to certify household income eligibility at move-in and at each annual recertification, forming the core of the owner's compliance file.
HCCP HCCP Annual Certification Procedures 2
Under the 'available unit rule,' what must a LIHTC owner do when a tenant's income rises above 140% of the applicable income limit?