LIHTC Property Management & Compliance Monitoring 2 — Questions and Answers
Question 1: Under the LIHTC 'available unit rule,' if a previously 100%-qualified building has a unit become available, what must the owner do before renting to a market-rate tenant?
- Keep the unit vacant for at least 60 days
- Obtain TCAC approval for the market-rate lease
- Rent the next available unit to a qualified low-income household first (Correct answer)
- Convert the unit to a manager's unit temporarily
Correct answer: Rent the next available unit to a qualified low-income household first
The available unit rule requires owners to rent the next comparable available unit to a qualified household before renting any unit to an over-income or market-rate tenant.
Question 2: Which of the following generally does NOT qualify as a 'low-income unit' for LIHTC purposes?
- A unit occupied by a 50% AMI household in a 50% AMI project
- A vacant unit previously occupied by a qualified tenant being held available for rent
- A unit used as a live-in resident manager's unit (Correct answer)
- A unit occupied by a 60% AMI household in a 60% AMI project
Correct answer: A unit used as a live-in resident manager's unit
Resident manager units are typically excluded from the qualified unit count because they are not available to low-income applicants from the general public.
Question 3: Under the LIHTC full-time student rule, which household is eligible to occupy a tax-credit unit?
- A household of two unrelated full-time college students
- A single parent with a child, both enrolled full-time in school (Correct answer)
- A household of five full-time students with no extenuating circumstances
- A full-time student household receiving no public assistance
Correct answer: A single parent with a child, both enrolled full-time in school
Single parents with children are one of the five exceptions to the full-time student prohibition under IRC Section 42(i)(3)(D), making them eligible for LIHTC units.
Question 4: What is the primary purpose of a LIHTC Extended Use Agreement (EUA)?
- To authorize the developer to syndicate tax credits to investors
- To restrict the property to affordable housing use beyond the initial 15-year compliance period (Correct answer)
- To set the maximum rent for all units during the credit period
- To establish the qualified basis for annual credit calculations
Correct answer: To restrict the property to affordable housing use beyond the initial 15-year compliance period
The EUA, recorded against the property, legally binds the owner to maintain affordability restrictions beyond the initial compliance period, typically for 30 or more years.
Question 5: During a TCAC compliance review, which documentation is the primary tool for verifying tenant income eligibility at move-in?
- The executed lease agreement
- The Tenant Income Certification (TIC) supported by third-party verifications (Correct answer)
- The property management contract
- The tax credit allocation letter (IRS Form 8609)
Correct answer: The Tenant Income Certification (TIC) supported by third-party verifications
The Tenant Income Certification, together with third-party income verifications such as employer letters and pay stubs, is the cornerstone compliance document confirming household eligibility.
Question 6: Under the LIHTC 'vacant unit rule,' when does a formerly qualified vacant unit continue to count toward the project's qualified basis?
- When it has been vacant for fewer than 90 days only
- When it is held available for rent and the owner's marketing procedures for low-income tenants remain unchanged (Correct answer)
- When the owner files a TCAC vacancy notice within 30 days
- When the vacancy is caused by a natural disaster or force majeure
Correct answer: When it is held available for rent and the owner's marketing procedures for low-income tenants remain unchanged
The vacant unit rule allows a previously qualified unit to maintain its status if the owner continues to market the unit to low-income households and has not changed its income-restricted nature.
Question 7: Per IRS Revenue Procedure 2016-15 safe harbor, what minimum percentage of LIHTC low-income units must be physically inspected at least once every 3 years?
- 5%
- 10%
- 20% (Correct answer)
- 33%
Correct answer: 20%
IRS Rev. Proc. 2016-15 establishes a safe harbor requiring state agencies to physically inspect at least 20% of low-income units (minimum 3 units) per building every 3 years.
LIHTC Property Management & Compliance Monitoring 2
Under the LIHTC 'available unit rule,' if a previously 100%-qualified building has a unit become available, what must the owner do before renting to a market-rate tenant?