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Guide for Completing Form 8823 - page 125 / 197

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125 / 197

Chapter 12 Category 11h Project not Available to the General Public

Note

*As part of the Housing Assistance Act of 2008, IRC §42(g) was amended to add a clarification of the General Public Use requirement. Until further guidance is provided through administrative ruling or regulation, IRS will evaluate an owner’s compliance with the General Public Use Rule as explained here.*

Definition

This category is used to report properties that are not available to the general public. A residential rental unit is for use by the general public if the property conforms to the requirements of Treas. Reg. §1.42-9. The general public use rules are violated any time the general public is denied access to LIHC housings. 1

Under Treas. Reg. §1.42-9(b), if a residential unit is provided only for a member of a social organization or provided by an employer for its employees, the unit is not for use by the general public and is not eligible for credit under IRC §42. *However, as clarified in IRC §42(g)(9)2, a qualified low-income project does not fail to meet the general public use requirement solely because of occupancy restrictions or preferences that favor tenants (1) with special needs, (2) who are members of a specified group under a Federal program or state program or policy that supports housing for such a specified group, or (3) who are involved in artistic or literary activities.*

In addition, any residential rental unit that is part of a hospital, nursing home, sanitarium, life care facility, retirement home providing significant services other than housing, dormitory, trailer park, or intermediate care facility for the mentally and physically disabled is not for use by the general public.

Fair Housing LIHC properties are also subject to Title VIII of the Civil Rights Act of 1968, which makes

Act

it unlawful to discriminate in any aspect relating to the sale, rental, or financing of dwellings

because of race, color, religion, sex, or national origin. The Fair Housing Act of 1988 expanded coverage of Title VIII to include familial status and disabilities. Notifications of administrative and legal actions in regards to the Fair Housing Act are also reported to the IRS using Form 8823. See chapter 13 for complete discussion.

In Compliance

Owners must rent their units in a manner consistent with the general public use requirements to be in compliance with IRC §42. Residential rental units must be for use by the general public and all of the units in a project must be used on a nontransient basis. *In addition, the owner must not evict, nonrenew the lease for, or otherwise terminate the tenancy of, an existing tenant of any low-income unit for other than good cause. (See Chapter 26)*

General Explanation of the Tax Reform Act of 1986, H.R. 3838, 99th Congress; Public Law 99-514. *IRC §42(g)(9) was added by section 3004(g) of the Housing Assistance Act of 2008 and is applicable to buildings placed in service before, on, or after July 30, 2008, the date of enactment.* 1 2

12-1

Revised October 2009

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