The Internal Revenue Service last week released an updated Form 8609 for Low Income Housing Tax Credit projects. Under Part II, the form has a new set-aside election option “Average income”.
Income averaging, included in the 2018 omnibus spending bill, creates a larger pool of tax credit eligible tenants, bringing the maximum allowable income from 60% AMI to 80% AMI so long as the average income of all tenants is no greater than 60% AMI. The provision will allow tax credit properties to reach both higher and lower incomes.
Several states have already adopted policies for dealing with the income averaging election while still others remain in the policy formation and comment collection process.
