South Carolina Housing Authority Comments on Forthcoming Guidance on Low-Income Housing Credit
South Carolina Housing Authority Comments on Forthcoming Guidance on Low-Income Housing Credit
- AuthorsNicholson, Laura
- Institutional AuthorsSouth Carolina State Housing Finance and Development Authority
- Code Sections
- Subject Area/Tax Topics
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 2006-23630
- Tax Analysts Electronic Citation2006 TNT 226-14
November 13, 2006
Eric Solomon, Esq.
Acting Assistant Secretary for Tax Policy
Department of the Treasury
1500 Pennsylvania Avenue, N.W.
Room 3120
Washington, D.C. 20220
Re: Qualified Contract Price
Dear Mr. Solomon,
I understand that your office is currently working on guidance and clarification to the rules regarding the Qualified Contract Price (QCP) and procedures outlined in Section 42 of the IRS Code. As our first properties became eligible for the Option Year, we believed it was necessary to establish state guidance for owners who may wish to exercise their right to sell their property at the QCP. In 2005, South Carolina established procedures outlining how owners can exercise their right to sell tax credit properties.
South Carolina developed worksheets for owners to input their tax information and determine the QCP. It appears, however, that based on the calculations that the QCP may, in many cases, exceed the Fair Market Value (FMV) of a property. One reason this could occur is the calculation for "Adjusted Investor Equity" where owner investments are adjusted by a cost of living index such as the CPI, which, over fifteen years can add up to a substantial amount.
We are concerned that as other restrictions expire, owners will elect to exercise their Option Year and establish a legally allowed QCP that exceeds FMV. Therefore, we suggest that you consider placing a cap on the low-income portion of a property, which must not exceed the FMV for that portion, as determined by an independent licensed appraiser, approved by the state monitoring agency. We believe this would allow an owner to sell his or her property at a fair price to another owner who wishes to continue the low-income use of that property and would prevent the loss of low-income units due to an unrealistically high and financially infeasible sale price.
Your consideration of this request is appreciated. Sincerely,
Tax Credit Program Manager
SC State Housing Finance &
Development Authority
(803) 896-9190;
laura.nicholson@schousing.com
Columbia, South Carolina
- AuthorsNicholson, Laura
- Institutional AuthorsSouth Carolina State Housing Finance and Development Authority
- Code Sections
- Subject Area/Tax Topics
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 2006-23630
- Tax Analysts Electronic Citation2006 TNT 226-14