Section 42 Housing or the Housing Tax Credit (HTC) program has provided thousands of units of housing to moderate and low-income elderly individuals and families across the country. The main objective of the program is compliance with the complicated rules and regulations set-forth by the IRS. The objective of these rules is to assure that units are rented to income qualified individuals. Without this, the tax credits that the investors buy are tainted and may even be recaptured. The Fentress Group, LLC's service to investment limited partners and syndicator is to insure that the Partnership receives all of the tax credits it is entitled.
Qualifying an individual may seem like a simple enough task, but there are multiple rules to follow, third party verifications to do and a variety of documentation needed. The Fentress Group, LLC offers initial compliance reviews or a pre-approved review at initial lease-up. These services provide investors the assurance that the initial occupancy for all units was met with a qualified tenant. This is important for claiming credits and meeting the minimum set aside test. Allowing a non-qualified tenant to occupy a unit in the first year could jeopardize the Partnership's minimum set-aside test and the investor's tax credits.
In addition to the initial rent-up, continued compliance in the program is a must. The compliance period for IRS Section 42 is a minimum of 15 years. However, most state housing finance agencies require extended use agreements that extend the compliance period. The Partnership must continue to income qualify their tenants throughout the compliance period. The Fentress Group, LLC gives comfort to the investors and syndicators by performing annual file reviews to give them the assurance that compliance is being maintained.
Just remember compliance is key. Without an appropriate monitoring system in place, your product will be viewed as suspect or risky by your investors or syndicators.
