IRS Notice 2021-17

Clarification Regarding Lease Up and Credit Calculation

Yesterday, the IRS issued Notice 2021-17 clarifying Section IV.E. of Notice 2021-12. Specifically, the IRS updated the citation in Section IV.E of Notice 2021-12 from “42(f)” to “42(f)(3)(A)(ii)” clarifying the IRS’s intent that Section IV.E. of Notice 2021-12 extended until June 30, 2021 the deadline for a new LIHTC building to achieve occupancy on units that are vacant as of December 31, 2020 without that building having to claim 15-year credits on those units that are vacant as of December 31, 2020.

It appears that if a LIHTC building applies Notice 2021-12 as clarified by Notice 2021-17, but does not achieve 100% occupancy by June 30, 2021, then the building would be left to claim 15-year credits on the vacant units when they are eventually leased up post June 30, 2021.

Yesterday’s clarification is also important because it indicates that the IRS did not intend for Section IV.E. in Notice 2021-12 to allow a LIHTC building to treat its qualified basis on June 30, 2021 (when it has achieved 100% occupancy) as its qualified basis on December 31, 2020 for purposes of calculating credits for 2020.

Click here to read the IRS notice.