MH industry applauds IRS guidance on utility payments
The National Multi Housing Council (NMHC) and National Apartment Association (NAA) applauded guidance issued early May by the IRS concerning utility allowance calculations on Low-Income Housing Tax Credit (LIHTC) properties that submeter.
At the urging of NMHC/NAA, last July the IRS issued regulations changing the way rents are adjusted on LIHTC properties where residents pay for their own utilities. The changes allowed property owners to use more accurate data to calculate resident-paid utilities.
"These changes were very important to the nation's supply of affordable housing," said David Cardwell, NMHC's vice president of capital markets. "Rents on LIHTC properties are reduced by the amount a resident pays in utilities. Before last year's changes, the methods the IRS was using to estimate resident utility costs tended to overestimate them. This, in turn, reduced the gross rent received by property owners and was threatening the financial viability of many LIHTC properties."
"Unfortunately, the 2008 regulations included a provision that fundamentally changed an owner's ability to submeter," explained Cardwell. "Specifically, they stated that only utilities directly paid by the resident to the utility company can be included in the utility
