The Internal Revenue Service updated the regulations that set the minimum number of low-income units in a Low-Income Housing Tax Credit project for which a housing finance agency must conduct physical inspections and low-income certification reviews. The physical inspection protocol used by the Department of Housing and Urban Development Real Estate Assessmnt Center (HUD REAC) will satisfy the inspection requirements for these properties.

The minimum number of low-income units for which an Agency must conduct onsite inspections and low-income certification review is the lesser of (1) or (2) below:

  • (1) 20 percent of the low-income units in the low-income housing project, rounded up to the nearest whole number of units,
  • or (2) the Minimum Unit Sample Size set forth in the following Low Income Housing Credit Minimum Unit Sample Size Reference Chart:

IRS Regs LIHTC Inspection Table

The revenue procedure is effective on February 25, 2016. Agencies using the REAC protocol as part of the Physical Inspections Pilot Program, however, may rely on these provisions for on-site inspections and low-income certification review occurring between January 1, 2015 and February 25, 2016.