Source: https://taxassociate.wordpress.com/2011/01/29/residential-rental-housing-basics/
Timestamp: 2017-10-18 23:55:57
Document Index: 656424308

Matched Legal Cases: ['§ 142', '§ 42', '§ 142', '§ 42', '§ 42', '§ 142', '§ 142', '§ 142', '§ 142', '§ 1', '§ 168', '§ 168', '§ 142', '§ 42', '§ 142', '§ 1', '§ 1', '§ 1', '§ 142', '§ 142', '§ 1', '§ 42', '§ 142', '§ 42', '§ 142', '§ 42', '§ 142', '§ 142', '§ 1', '§ 1', '§ 147', '§ 144', '§ 1', '§ 1', '§ 145', '§ 1', '§ 42', '§ 42', '§ 142', '§ 1']

Qualified Residential Rental Projects (I.R.C. § 142(d)); Low-Income Housing Credit (I.R.C. § 42) | Public Finance
Qualified Residential Rental Projects (I.R.C. § 142(d)); Low-Income Housing Credit (I.R.C. § 42)
Qualified Residential Rental Projects – Basic Discussion:
Residential rental property can be financed, among other sections, under I.R.C. §§ 42 (LIHTC), 142(d) (Exempt Facility Bonds) or 145(d) (Qualified 501(c)(3) Bonds). See this posting for additional 142-related matters discussed in the context of the low-income housing credit.
Qualified Residential Rental Projects under I.R.C. § 142(d):
See this posting for general information applicable to exempt facility bonds.
Section 142(a)(7) provides that the term “exempt facility bond” includes any bond issued as part of an issue 95% or more of the net proceeds of which are to be used to provide qualified residential rental projects.
Section 142(d)(1) provides that the term “qualified residential rental project” means any project for residential rental property if, at all times during the qualified project period, such project meets the requirements under I.R.C. § 142(d)(1)(A) or (B) (the “set-aside requirements“), whichever is elected by the issuer at the time of the issuance of the issue with respect to such project.
The set-aside requirements include the 20/50 and 40/60 set aside thresholds:
A project meets the requirements of I.R.C. § 142(d)(1)(A) if 20 percent or more of the residential units in the project are occupied by individuals whose income is 50 percent or less of the area median gross income (AMGI).
A project meets the requirements of I.R.C. § 142(d)(1)(B) if 40 percent or more of the residential units in the project are occupied by individuals whose income is 60 percent or less of the AMGI. (There is a special rule for a city having 5 boroughs and a population in excess of 5,000,000 – i.e., New York City.)
Once available for occupancy, each unit in the residential rental project must be rented or available for rental on a continuous basis during the longer of the remaining term of the obligations, or the qualified project period. Treas. Reg. § 1.103-8(b)(5).
“Residential rental property” means, as defined in I.R.C. § 168(e)(2)(A), any building or structure if 80% or more of the gross rental income from such building or structure for the taxable year is rental income from dwelling units. For example, a project that has commercial rental income that exceeds 20% of the gross rental income of the building would fail to satisfy the residential rental property test and would not be eligible for tax-exempt financing under the qualified residential rental project qualification. Property does not fail to be residential rental property merely because part of the building in which such property is located is used for purposes other than residential rental purposes. House Report No. 98-432 (PL 98-369) p. 1695 clarified that under this “mixed use” rule, a building may qualify as residential rental property even though all or a portion of the bottom floor is used for commercial use. However, only the portion used for residential rental use qualified for tax-exempt financing. Therefore, under the definition in I.R.C. § 168(e)(2)(A), a qualified residential rental project for tax-exempt bond purposes is defined as any project for property comprised of any building or structure if 80% or more of the gross rental income from such building or structure for the taxable year is rental income from dwelling units. I.R.C. § 142(d)(1) flush language. See also Novogradac Low-Income Housing Tax-Exempt Bond Handbook – 2012 Edition.
The regulations provide that a project is residential rental property if it is not used on a transient basis and is available for use by the general public.
The term “residential rental property” for purposes of I.R.C. § 42 has the same meaning as for I.R.C. § 142(d). See Conference Committee Report to the 1986 Act, CCH paragraph 7252, and General Explanation, TRA ’86, page 157. See also Rev. Rul. 98-47. Congress has indicated that the tax-exempt bond financing regulations should be used for general guidance. Conference Committee Report to the 1986 Act, CCH paragraph 7252.
“Project” or “Residential rental project,” as defined in Treas. Reg. § 1.103-8(b), means the following:
A residential rental project is a “building or structure,” together with any functionally related and subordinate facilities, containing one or more similarly constructed units (a) which are used on other than a transient basis, and (b) which satisfy the requirements of paragraph (b)(5)(i) of this section and are available to the general public in accordance with the requirements of paragraph (a)(2) of this section. Substantially all of each project must contain such units and functionally related and subordinate facilities. Hotels, motels, dormitories, fraternities and sorority houses, rooming houses, hospitals, nursing homes, sanitariums, rest homes and trailer parks and courts for use on a transient basis are not residential rental projects.
Proximate buildings or structures which have similarly constructed units are treated as part of the same “project” if they are owned for federal tax purposes by the same person and if the buildings are financed pursuant to a common plan. Buildings are “proximate” if they are located on a single tract of land. The term “tract” means any parcel or parcels of land which are contiguous except for the interposition of a road, street, stream or similar property. Otherwise, parcels are contiguous if their boundaries meet at one or more points. A “common plan of financing” exists if, for example, all such buildings are provided by the same issue or several issues subject to a common indenture.
A project does not include any building or structure which contains fewer than five units, one unit of which is occupied by an owner of the units. Treas. Reg. § 1.103-8(b)(4)(iv).
A “building or structure” generally means a discrete edifice or other man-made construction consisting of an independent foundation, outer walls and roof. A single unit which is not an entire building but is merely a part of a building is not a building or structure. As such, while single townhouses are not buildings if their foundation, outer walls and roof are not independent, detached houses and row houses are buildings.
All of the units in the project must be used for rental. See Treas. Reg. § 1.103-8(b)(9), ex. 3.
“Functionally related and subordinate facilities“: Facilities that are functionally related and subordinate to residential rental projects include facilities for use by the tenants. This includes, for example, swimming pools, other recreational facilities, parking areas and other facilities that are reasonably required for the project, for example, heating and cooling equipment, trash disposal equipment or units for resident managers or maintenance personnel.
“Qualified project period,” as defined in I.R.C. § 142(d)(2)(A), means the period beginning on the first day on which 10 percent of the residential units in the project are occupied (or the issue date, if after the 10-percent date) and ending on the latest of:
the date that is 15 years after the date on which 50 percent of the residential units in the project are occupied;
the first day on which no tax-exempt private activity bonds issued with respect to the project is outstanding; or
The income of individuals and “AMGI” is determined by the Secretary in a manner consistent with determinations of lower income families and AMGI under section 8 of the United States Housing Act of 1973. Determinations include adjustments for family size. You may disregard payments under section 403 of title 37, U.S.C., as a basic pay allowance for housing with respect to a “qualified building.” I.R.C. § 142(d)(2)(B).
“Residential units” or “unit” (as defined in Treas. Reg. § 1.103-8(b)(8)(i)) means any accommodation containing separate and complete facilities for living, sleeping, eating, cooking and sanitation. Such accommodations may be served by centrally located equipment, such as air conditioning or heating. Thus, for example, an apartment containing a living area, a sleeping area, bathing and sanitation facilities, and cooking facilities equipped with a cooking range, refrigerator and sink, all of which are separate and distinct from other apartments, would constitute a “unit.”
Rules for Students: Rules similar to I.R.C. § 42(i)(3)(D) apply with respect to students. A unit does not fail to be treated as a low-income unit merely because it is occupied by an individual who is a student and receiving assistance under title IV of the Social Security Act, a student who was previously under the care and placement responsibility of certain state agencies, enrolled in job training program receiving certain types of assistance, or an individual who is a full-time student if the student is a single parent and the and their children and such parents are not dependents, or married and file a joint return. I.R.C. § 142(d)(2)(C).
A unit does not fail to be treated as a residential unit merely because the unit is a single-room occupancy unit, within the meaning of I.R.C. § 42. I.R.C. § 142(d)(2)(D). A single-room occupancy unit is not treated as used on a transient basis merely because it is rented on a month-by-month basis.
Section 142(d)(3) contains rules for purposes of determining whether an increase in the income of individuals that occupy a residential unit will cause the individuals to no longer qualify as low-income tenants:
The determination of whether the income of a resident of a unit in a project exceeds the applicable income limit is made at least annually on the basis of the current income of the resident, but not for any year if during that year no residential unit is occupied by a new resident whose income exceeds the applicable income limit.
If the income of the resident did not exceed the applicable income limit when the resident moved in, the income of that resident is treated as continuing to not exceed the applicable income limit. That exception no longer applies if (a) the income exceeds 140% of the applicable income limit and (b) a residential unit of comparable or smaller size in the project is occupied by a new resident whose income exceeds the applicable income limit. I.e., the next available unit must be rented out to someone within the income limit. This provision is adjusted in the case of a project with respect to which a LIHTC is permitted – by substituting “building” (within the meaning of I.R.C. § 42) for “project.”
There are special rules in I.R.C. § 142(d)(4) for deep rent skewed projects which are projects in which, among other requirements, 15 percent or more of the low-income units in the project are occupied by individuals whose income is 40 percent or less of AMGI. For deep rent skewed projects, the test in paragraph 2 above becomes a 175% test instead of a 140% test, and (b) in that paragraph becomes “any low-income unit in the same project is occupied by a new resident whose income exceeds 40% of AMGI.” “Low-income unit” in this context means any unit which is required to be occupied by individuals who meet the applicable income limit.
It appears that the special office space rule limits the amount of exempt facility bond proceeds for qualified residential rental projects that may be used to finance an office. I.R.C. § 142(b)(2).
Note that the reimbursement rules for exempt facility bonds in Treas. Reg. § 1.142-4 state that, generally one is to apply the reimbursement rules in Treas. Reg. § 1.150-2 for expenditures for a facility paid before the issue date of the bonds. If the proceeds, however, are used to pay principal or or interest on an obligation other than a State or local bond (for example, temporary construction financing of the conduit borrower), that issue is not a refunding issue and must satisfy the reimbursement rules and new money rules, generally. See this posting for additional discussion of the reimbursement rule and the rule treating a refunding of a non-State or local bond as a new money financing.
Interest on an exempt facility bond for a qualified residential rental project is includable in gross income if the obligation is held by a substantial user (I.R.C. § 147(a)(1)) or a related person (I.R.C. § 144(a)(3)). Treas. Reg. § 1.103-8(a)(1)(i).
See example 5 at Treas. Reg. § 1.103-8(b)(9) for a project in which the developer subsequently converts 80% of the units to condominiums. Repayment of the obligations is not enough to cure noncompliance. “The obligations are not used to provide a residential rental project within the meaning of section 103(b)(4)(A), and all of the interest paid or to be paid on such obligations will be includable in gross income.”
Residential Rental Projects under I.R.C. § 145(d):
Section 145(d)(1) generally states that a bond cannot be a “qualified 501(c)(3) bond” if any portion of the net proceeds are used to provide residential rental property. There are three exceptions, however, under which a bond for such purpose can nevertheless qualify as a “qualified 501(c)(3) bond”:
If the property is “residential rental property for family units” (see Treas. Reg. 1.103-8(b)(10)) the first use of which is pursuant to such bond issue; or
If the property constitutes “qualified residential rental projects” as defined in Section 142(d); or
If the property is substantially rehabilitated.
In addition, a facility similar to a residential rental facility, but for nursing-type care/assisted living, may qualify separately for financing with qualified 501(c)(3) bond proceeds. See Rev. Rul. 98-47 for a good analysis of the residential rental facility status of three buildings that are part of a single complex.
“Residential rental property for family units” can include a single, self-contained building. See the regulations under 103.
Student housing probably is not restricted because student housing does not necessarily constitute property “for family units” as referred to in 1.103-8(b)(10). The regulations explain that “dormitories” are not residential real property for family units. Is this the correct explanation? There is probably a better explanation elsewhere.
YMCA camps with counsel residential buildings. Those residential buildings might be used for more than a transient basis.
First Use Exception:
In 1989, the Donnelly amendment (H.R. 151) provided the following exceptions for purposes of the “first use” exception: To determine whether the first use of the property is pursuant to tax-exempt financing:
The 1st use of the property is treated as being pursuant to the tax-exempt financing if: (1) the 1st use of the property is pursuant to taxable financing (note Q&A below); (2) there was a reasonable expectation (at the time the taxable financing was provided) that the financing would be replaced by tax-exempt financing; and (3) the taxable financing is in fact so replaced within a reasonable period after the taxable financing was provided.
[Special rule where no operating state or local program for tax-exempt financing]
Refunding of tax-exempt issue that originally financed the property should be permitted even though the first use of the property is not pursuant to that refunding issue. The refunding issue, for this purpose, should be able to step in the shoes of the refunded original tax-exempt issue. The refunding does not change the fact that the first use was pursuant to “tax-exempt financing” generally.
Qualified Residential Rental Projects:
Section 145(d) provides that bonds issued to acquire existing residential rental property for family units must meet the same low-income targeting rules applicable to qualified residential rental facilities under Section 142(d) of the Code, unless substantially rehabilitated. Note that the qualified 501(c)(3) bonds must, of course, satisfy the exempt purpose of the 501(c)(3) organization in order to be tax-exempt. Such activities might be charitable if they “relieve the poor and distressed,” as described in Treas. Reg. 1.501(c)(3)-1(d)(2). It does not follow that a project that satisfies Section 142(d) must automatically have an organization that is a 501(c)(3) organization – thus, ensure that the 501(c)(3) organization status is valid and within the scope of the project.
See also Notice 93-1 (safe harbor guidelines for 501(c)(3) determination) and subsequent Rev. Proc. 96-32.
Substantially Rehabilitated:
Property is “substantially rehabilitated” for purposes of Section 145(d) of the Code if:
Rehabilitation begins during the 12-month period preceding or following the date the property is acquired; and
Rehabilitation expenditures during a two-year testing period (beginning with the date described in (1) above) exceed the greater of $5,000 or the adjusted basis of the building (and its structural components). See Section 47(c)(1)(C) of the Code for rules relating to determination of substantial rehabilitation.
“Assisted Living Facility” means a residential facility in which continual or frequent nursing, medical or psychiatric services, within the meaning of Rev. Rul. 98-47, 1998-2 C.B. 399, are made available to the residents.
“Residential Rental Project” means a building or structure, or group of proximate buildings or structures, containing units that provide separate and complete facilities for living, sleeping, cooking, eating and sanitation for individuals or families, not on a transient basis, and functionally related and subordinate facilities thereto, all as described in Treas. Regs. §§ 1.103‑8(b)(4) and (8), issued under the Code, and within the meaning of Section 145(d)(2) of the Code. See definition and additional discussion above.
To find that a facility is an assisted living facility, and not a residential rental project, look for the following characteristics:
Is it a nursing home? (Specifically excluded from “residential rental project,” but cannot rely on name only – must be a nursing home based on actual operation)
Unit does not have cooking and/or eating facilities (Note discussion below)
There are state licensing requirements for the operation of the facility
Non-housing and healthcare services are offered to residents
What level of medical services is offered? (Look for continual or frequent nursing, medical or psychiatric care, which is required by Treas. Reg. 1.42-11(b))
Note that the 2008 housing act appears to state that it is not relevant anymore whether a unit is a complete living unit with cooking and/or eating facilities.
Section 501(c)(3) Status for Section 145(d) Purposes:
It goes without saying that the conduit borrower, for Section 145(d) purposes, must have received a Section 501(c)(3) designation letter from the Internal Revenue Service and qualify as a Section 501(c)(3) organization. See Rev. Proc. 96-32 regarding guidelines for tax-exemption under Section 501(c)(3) for organizations that provide low-income housing. The revenue procedure provides a safe harbor, describes the actual facts and circumstances test and points out that there are other charitable purposes that may qualify the organization under Section 501(c)(3). In sum, it is not enough for the organization’s operations to satisfy the “normal” 40/60 test under Section 142(d)(1)(B).
Also note that an organization that provides assistance to the aged or physically handicapped who are not poor must satisfy the requirements set forth in Rev. Rul. 72-124, Rev. Rul. 79-18 and Rev. Rul. 79-19, among others.
Low-Income Housing Tax Credits:
Section 42(a) of the Code provides that the amount of the low-income housing credit for any taxable year in the credit period is an amount equal to the applicable percentage of the qualified basis of each qualified low-income building.
Under section 42(c)(1)(A), the qualified basis of any qualified low-income building for any taxable year is an amount equal to the applicable fraction (determined as of the close of the taxable year) of the eligible basis of the building.
See PLR 200305015 for a discussion of how “eligible basis” is calculated, and what may be considered capitalizable costs.
See this presentation for a helpful, quick overview of the LIHTC program.
Tax credit equity for the project =
Calculate qualified basis from the development budget
Multiply by the credit percentage to determine the credit amount
Multiply the total 10-year credit by the market price for credits (e.g., 75 cents per credit dollar).
The credit is claimed annually for a period of 10 years. I.R.C. § 42(f)(1). The types of costs that generally can qualify for the credit are acquisition costs, rehabilitation expenses and new construction costs. I.R.C. § 42(d) and (e).
The calculation of the LIHTC involves two parts: (1) the initial year calculation and (2) the succeeding year calculations.
The initial year calculation has four components:
Qualified low-income building;
Credit percentage;
Low-income occupancy percentage; and
Eligible basis.
To qualify for the credit, a project must be a “qualified low-income building.” To calculate LIHTC for the initial year, the building owner must determine the building’s qualified basis. A buildings qualified basis is the product of the building’s applicable fraction (generally its low-income occupancy percentage) and its eligible basis. When calculating a building’s eligible basis, taxpayers must ensure that they have sufficient “at-risk” basis. The amount of LIHTC that a building power may claim in the initial year is the building’s qualified basis multiplied by the credit percentage.
In succeeding years, three of the previously enumerated four items will affect the amount of LIHTC that a building owner may claim and whether a tax credit recapture situation exists. They are: Qualified low-income building; low-income occupancy percentage; and eligible basis. To claim the LIHTC, annual LIHTC certifications are required.
The calculation of the credit percentage depends on whether the project involves new or existing buildings, whether any federal subsidies are used and when the project was placed in service.
New buildings generally are allowed a higher credit percentage. This credit is referred to as the 9% credit. Existing buildings are eligible for the lower credit. This lower credit is referred to as the 4% credit.
A new building that receives a federal subsidy is not eligible for the 9% credit but rather is eligible for the 4% credit. The building will be deemed to be federally subsidized for a particular year if the federal subsidy is outstanding at any time during such taxable year, or was outstanding during any prior taxable year.
For buildings that were placed in service in 1987, the 4% and 9% credits are exactly 4% and 9%, respectively. For buildings that are placed in service after 1987, the 4% credit is recalculated on a monthly basis to yield a present value of 30% of costs that qualify for the credit. The 9% credit is similarly recalculated on a monthly basis to yield a present value of 70%.
Cash Collaterizalized Multifamily Residential Rental Bonds:
A common structure for short-term cash collateralized bonds is as follows: (1) Short-term bonds are issued and the proceeds are deposited to a “treasury account” of the project fund (and usually also to a capitalized interest account). The bonds typically have a maturity of around 2.5 years. (2) The treasury account is invested in treasury bills until the bond proceeds are disbursed to pay project costs. (3) Disbursement to the developer occurs each time the trustee receives the collateral moneys (HUD loan proceeds, HUD grants, equity, etc.). The collateral moneys are deposited to a collateral account. The trustee liquidates the treasury account investments and transfers the proceeds to the developer. The trustee then uses the collateral moneys to purchase the liquidated treasury bills as investments for the collateral account. (4) Upon maturity of the bonds, the trustee liquidates the collateral account and uses the proceeds to pay off the bonds.
The short-term cash backed bond structure allows developers to secure an allocation of the four percent LIHTCs and lock in the long-term rate available in the credit markets using either the FHA, Freddie Mac or Fannie Mae conventional loan alternative.
Certain current developments have promoted the use of short-term cash backed bonds: high grade taxable rates that have been lower than comparable tax-exempt multifamily rates; GNMA’s bonds have traded extremely tight to Treasury bonds; the FHA has streamlined its approval process for certain loans; and Freddie Mac and Fannie Mae have been aggressively looking to finance low-income developments.
See Rev. Rul. 80-328 regarding two fact patterns in which a political subdivision’s short-term notes that are issued contemporaneously with long-term bonds will be arbitrage bonds. The financings are considered an artifice or device and constitute an overissuance.
Compliance with Set-Aside Requirements:
Section 1.103-8(b)(6)(i) of the Regulations has a noncompliance correction rule. If a project does not comply with the set-aside requirements continuously during the qualified project period, the project will not be a qualified residential rental project (all the way back to the issue date!), unless the noncompliance is corrected within a reasonable period. The “reasonable period” is at least 60 days after the noncompliance is first discovered or would have been discovered by the exercise of reasonable diligence. If noncompliance is not corrected within a reasonable period, subsequent compliance does not alter the taxable status of the bonds that financed the project.
Rev. Proc. 2004-39 sets forth rules to determine whether a residential rental project is in compliance with the set-aside requirements contained in I.R.C. § 142(d) during the qualified project period.
The general rule, under the Revenue Procedure, is that the set-aside requirements apply to the total number of available units, beginning on the first day of the qualified project period (i.e., the later of the first day on which at least 10% of all of the residential units in the project are occupied or the issue date of the bonds).
The special rule in the Revenue Procedure applies to certain existing projects. In connection with the acquisition of an existing residential rental project, during a transition period of one year beginning on the issue date, failure to comply with the general set-aside rule described above does not cause the project to not be a qualified residential rental project. If the set-aside requirements are not satisfied by the end of the one-year transition period, however, all bonds issued to finance the project must be redeemed as soon as possible, but in no event later than 18 months after the issue date. (Note, however, that this special transition period does not apply where more than 90% of the residential units in the project are not “available” units at any time within 60 days after the later of the date the project is acquired or the issue date of the first bonds – for example because the units are not available for occupancy due to renovations.)
“Available units” – to which the set-aside applies – means (1) residential rental units in a residential rental project that are actually occupied, and (2) residential rental units that are unoccupied and have been leased at least once after becoming available for occupancy. For an existing residential rental project that is acquired, a residential unit is not “available” until it has been leased for the first time after the later of the date the project is acquired or the issue date of the first bonds. For a residential rental unit that is not available for occupancy due to renovations, such unit does not become “available” until it has been leased for the first time after the renovations are complete. (Note that I have rephrased the requirements to make them easier to ready – be sure to view the original text.)
Does a unit fail to qualify as a unit of residential rental property if there is no sink specifically dedicated to the kitchen area? Subject to facts and circumstances specific to each case, generally the unit would not satisfy the requirements for a “unit” of residential rental property under Treas. Reg. § 1.103-8(b)(8). “A ‘unit’ is any accommodation containing separate and complete facilities for living, sleeping, eating, cooking, and sanitation. The regulations note that an example of a unit would be a separate and distinct apartment containing a living area, a sleeping area, bathing and sanitation facilities, and cooking facilities equipped with a cooking range, refrigerator, and sink.” (See Rev. Proc. 98-47.) In other words, the sink in the unit must be a sink that is in the unit for the purpose of completing the kitchen – not merely a sink that is part of a utility room or bathroom sink. (See also 26 U.S.C. 142(d).)
Taxable Financing Exception (Donnelly) to First Use: Can the taxable financing be done by the developer, who will then sell the completed facility to the 501(c)(3) entity, which finances such purchase using tax-exempt bonds? It would be reasonable to conclude that the Donnelly amendment requires that the 501(c)(3) entity be the entity which has actually entered into the taxable loan.
Correcting an 8038 Section 142(d) 40-60 Election: See PLR 201232006. The issuer had filed Form 8038-G indicating the 20-50 test. The 40-60 test was contemplated by the bond documents and the volume cap resolution of the issuer. The IRS determined that an amended Form 8038-G could be submitted within 45 days to “make” the correct election. Query, however, whether the election is properly made in the bond documents rather than in the Form 8038-G.
Getting rid of the LURA: Assume owners of multifamily facilities subject to I.R.C. 142(d) 15-year land use restrictions wish to convert the facilities into condominiums. Can the owners remove the 15-year use restrictions by conducting proper remedial actions under Treas. Reg. 1.142-2? It is not clear that this would work. Notiz 201211251.
Draw-Down Bonds: Consider Notice 2011-63 regarding issue date and volume cap.
See Rev. Proc. 2014-49 and Rev. Proc. 2014-50 for certain guidance concerning interpretation of rules for major disaster areas on and after August 21, 2014.
PLR 201515007: The relocation costs of a residential rental building were included in the basis of the building under Code Sec. 42(d)(1). The costs were incurred by the entity constructing the building and due to a city-imposed requirement to relocate an easement. The relocation costs directly benefitted, or were incurred by reason of, the construction of the residential rental building and they were capitalized indirect costs allocable to the residential rental building. This ruling relates to relocating easements, but not residents. There is still a question as to whether relocating residents is capitalizable.
FHA insured mortgage loans under Section 221(d)(4): Section 221(d)(4) of the National Housing Act insures mortgage loans to facilitate the new construction or substantial rehabilitation of multifamily rental or cooperative housing for moderate-income families, elderly, and the handicapped. Single Room Occupancy (SRO) projects may also be insured under this section. Read more.
FHA Form 2328: This is a form identifying the contractor’s or mortgagor’s breakdown of proposed costs of the project. The form is required to be submitted to receive a firm commitment from HUD for an FHA loan.
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