QCTs/DDAs and Construction Delays Due to COVID-19
IRS Rev Proc 2014-19, provides temporary relief to housing finance agencies (HFAs) and owners from certain requirements of §42 of the Internal Revenue Code. Section 6, paragraph .03 of this Rev Proc allows HFAs that administer the LIHTC to grant an extension to owners with carryover allocations for buildings located in a Major Disaster Area. With this extension, the IRS treats the owner as if the property met the placed-in-service requirement as long as the building is truly placed in service by the expiration of that extension.
HUD’s notice designating QCTs and DDAs allows an owner to qualify for the basis boost if a property is placed in service within 730 days of the receipt of the complete application by the HFA or bond-issuing agency and the property was located in a QCT or DDA at the time that the complete application was accepted. If an owner with a carryover allocation receives an extension under IRS Revenue Procedure 2014-49, the owner is eligible for the basis boost as long as 1) the building is truly placed in service before the extension expires, 2) the extension is granted within HUD’s 730-day grace period, and 3) the other conditions of the QCT/DDA eligibility rules were already met.