IRS Releases Area Median Gross Income Figures for Issuers of Mortgage Revenue Bonds and Mortgage Credit Certificates (Rev. Proc. 2011-37)

The IRS has issued guidance with respect to the United States and area median gross income figures used by issuers of qualified mortgage bonds and issuers of mortgage credit certificates in computing the housing cost/income ratio. The ratio is used to determine whether an area is a high housing cost area that requires an upward adjustment of the income limitations for the bonds and certificates. The Department of Housing and Urban Development (HUD) released the median gross income for the United States, the states and statistical areas within the states on May 31, 2011. The figures, released to HUD regional offices, are available at http://www.huduser.org/portal/datasets/il.html or the data may be obtained by calling the HUD reference service at 1-800-245-2691. The most recent nationwide average purchase prices and average area purchase price safe harbor limitations were published in Rev. Proc. 2011-23, I.R.B. 2011-15, 626.

When computing the housing cost/income ratio, issuers of qualified mortgage bonds and mortgage credit certificates must use either: (1) the median gross income for the United States, the states and statistical areas within the states, as released to the HUD regional offices on May 14, 2010, or (2) the median gross income for the United States, the states and statistical areas within the states, as released to HUD regional offices on May 31, 2011. If an issuer uses the median gross income for the United States, the states and statistical areas within the states, as released to the HUD regional offices on May 14, 2010, the issuer must use the median gross income for the United States, the states, and statistical areas within the states, as released to the HUD regional offices on May 14, 2010, for all purposes related to the computation of the housing cost/income ratio. If an issuer uses the median gross income for the United States, the states, and statistical areas within the states, as released to HUD regional offices on May 31, 2011, to compute the housing cost/income ratio, the issuer must use the median gross income for the United States, the states, and statistical areas within the states, as released to the HUD regional offices on May 31, 2011, for all its housing cost/income ratio computations.

Issuers must use the United States and median gross income figures in Rev. Proc. 2011-37, I.R.B. 2011-26, for commitments to provide financing that are made, or (if the purchase precedes the financing commitment) for residences that are purchased, in the period that begins on May 31, 2011, and ends on the date when these United States and area median gross income figures are rendered obsolete by a new revenue procedure.

Rev. Proc. 2010-23, I.R.B. 2010-24, 762, is obsoleted, with the exception that this guidance does not affect the effective date provisions of Rev. Rul. 86-124, 1986-2 C.B. 27.

Rev. Proc. 2011-37, 2011FED ¶46,375

Other References:

Code Sec. 25

CCH Reference – 2011FED ¶3809.20

Code Sec. 143

CCH Reference – 2011FED ¶7786.752

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