Understanding Tax Credit Units and Partnerships

Tax Credit Units Requirements

• Income limits, rent limits, and safe and sanitary conditions are essential for tax credit units.

General Partner

• Owners with unlimited liability.
• Actively involved in managing the firm.

Limited Partnership (LP)

• Composed of at least one general partner with unlimited liability.
• Limited partners are passive investors without management roles.

Syndicator

• Facilitates the relationship between general partners (GP) and limited partners (LP).
• Combines multiple projects into a single fund, offering shares to individual investors.

State HFAs

• Also known as state agencies or state allocating agencies.

Functions of State HFAs

• Responsible for allocation of tax credits.
• Conduct compliance monitoring according to IRS requirements.

Allocation Ceiling

• Adjusted yearly for inflation, based on state population.

Allocation Rules

• Detailed in the Qualified Allocation Plan (QAP).

Application Scoring

• Applications are scored based on the QAP; credits are awarded accordingly.

Noncompliance Reporting

• Reported to the IRS using Form 8823.

Physical Inspection Standards

• Uniform Physical Condition Standards (UPCS) are used for local code inspections.

Household Income Determination

• Consistent with Section 8 housing rules.

HUD Handbook Impact

• Changes in HUD handbook 4350.3 affect tax credit income and asset rules.

Required Tenant Documentation

• Must include household application, income verification, student status, and Tenant Income Certification (TIC).

Exemptions for Student Status

• Exemptions apply for married couples, single parents with minors, TANF recipients, former foster care recipients, and individuals receiving similar assistance.

Student Status Verification

• Required at move-in and annually thereafter.

Household Member Inclusion

• Includes temporarily absent children, joint custody children, foster children, unborn children, and other family members temporarily away.

Exclusion from Household Count

• Live-in attendants are not included.

Definition of Live-In Attendant

• Resides with elderly or disabled persons for essential care, not obligated for their support.

Annual Income Definition

• Total of earned income, unearned income, and income from assets before deductions (gross income).

Types of Income

• Unearned Income: Benefits and unemployment income.
• Earned Income: Income from jobs or wages.

Member Adjustment Policy

• Subtract members at the next recertification; verify and add income of new members immediately.

Verification Types Preference

• Third-party verification from the source is preferred, followed by documentation review, then family certification.

Document Use When Verification Fails

• Original documents are accepted if third-party verification is unattainable.

Weekly Income Calculation

• 40 hours per week equals 2,080 hours annually (52 weeks).

Pay Periods

• Weekly wages calculated over 52 weeks.
• Bi-weekly wages calculated over 26 pay periods.
• Semi-monthly wages calculated over 24 pay periods.
• Monthly wages calculated over 12 pay periods.

Raise Impact on Calculations

• Use the effective raise date for income calculations during certification.

IRS Schedules for Income Reporting

• Schedule C for business income, Schedule E for rental income, Schedule F for farm income.

This quiz covers the requirements and components of tax credit units, including the roles of general partners, limited partnerships, and syndicators. Additionally, it explains the functions of state housing finance agencies (HFAs) in allocating tax credits and compliance monitoring. Test your knowledge of these essential concepts in affordable housing finance.