A recent Notes from Novogradac blog post discusses the implementation of the income averaging election set-aside for low-income housing tax credit (LIHTC) properties created by the Consolidated Appropriations Act, 2018 .
The post explains an important misconception among practitioners: the new income averaging clause is not based on the actual income of residents. Instead, income averaging uses the income limit designated to a particular unit (which can only be 20%, 30%, 40%, 50%, 60%, 70%, or 80%).
The post points out another important fact to consider as well: the income averaging election cannot be applied to preexisting projects (unless the project is undergoing resyndication).
The post goes further to illustrate a few examples of unit mixes that would satisfy the income averaging test.
As for additional guidance and next steps, the Novogradac post points out that states will need to reexamine their QAPs including updating underwriting criteria and new requirements for market studies to show demand for the proposed various income limits.
The blog post has more information on these topics and others related in income mixing. Novogradac & Company will also offer a webinar on the income-averaging option April 17.
