IRS Offers Relief to Persons Displaced by Missouri Tornadoes, Storms and Flooding (Notice 2011-47)

The IRS has suspended certain requirements under Code Sec. 42 for low-income housing credit projects in order to provide emergency housing to those displaced by severe storms, tornadoes and flooding in Missouri beginning April 19, 2011. On May 9, 2011, President Obama declared a major disaster for the State of Missouri. Pursuant to a request by the State of Missouri, the IRS will allow owners of low-income housing credit projects to provide temporary housing in vacant units to individuals who resided in certain parts of Missouri and who have been displaced because of damage to or destruction of their residences. Suspension of various requirements under Code Sec. 42 will last through a “temporary housing period,” which will not extend beyond June 30, 2012.

First, the IRS has temporarily suspended income limitation requirements for certain qualified low-income projects. Second, displaced individuals occupying a unit during the appropriate time are deemed to be qualified low-income tenants for several purposes during the first year of the credit period. After the first year of the credit period, the status of a vacant unit temporarily occupied by a displaced individual remains the same as its status before that person moved in. Third, the nontransient use requirements of Code Sec. 42(i)(3)(B)(i) are suspended for any unit providing temporary housing to a displaced individual during the temporary housing period. All other rules and requirements of Code Sec. 42 continue to apply during the temporary housing period.

To qualify for relief, a project owner must meet requirements regarding the place of residence of the displaced individual during the storms, approval by a state housing agency, certifications and recordkeeping by project owners, rent restrictions, and protection of existing tenants. The notice is effective May 9, 2011.

Notice 2011-47, 2011FED ¶46,395

Other References:

Code Sec. 42

CCH Reference – 2011FED ¶4385.27

Tax Research Consultant

CCH Reference – TRC BUSEXP: 54,200

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