IRS Issues New Ruling on Rental Assistance

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THE IRS HAS ISSUED A NEW revenue ruling (2008-6) that says project- or tenant-based rental assistance payments made to an owner that are funded under the Indian Housing Block Grant (IHBG) program won’t be treated as federal grants under the low-income housing tax credit program. Accordingly, such amounts don’t have to be excluded from a project’s eligible basis.
         The IHBG program is administered by the U.S. Department of Housing and Urban Development (HUD).
         Rev. Rul. 2008-6 doesn’t address the issue of the proper housing credit rate for projects receiving IHBG-funded rent subsidies. Such subsidies already are treated as similar to HUD Section 8 rent subsidies, and therefore don’t deem a building to be federally subsidized and restricted to the 4% housing credit.
         Rev. Rul. 2008-6 is posted online at http://www.irs.gov/pub/irs-drop/rr-08-06.pdf.