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Guide for Completing Form 8823 - page 55 / 197





55 / 197

Tenant Moves to Another Low-Income Unit A household may move to another unit within a low-income project.

In the Same Building

When a household moves to a different unit within the building, the newly occupied unit adopts the status of the vacated unit.36 Thus, if a current household, whose income exceeds the applicable income limitation moves from an over-income unit to a vacant unit in the same building, the newly occupied unit is treated as an over-income unit. The vacated unit assumes the status the newly occupied unit had immediately before it was occupied by the current resident.

*Example 1: Household in Over-Income Unit Transfers Within Building

An initially income-qualified household occupying a low-income unit in a mixed-use project was determined to have income in excess of 140 percent of the current AMGI at the time of the last annual income recertification. The household subsequently moved from Unit A, a 2-bedroom over-income unit to Unit B, a vacant 3-bedroom low-income unit.

Even though the units are not comparably sized, Unit A is now a low- income unit and Unit B is an over-income unit.*

In a Different Building

As noted in Rev. Rul. 2004-82, Q&A #8, a similar rule applies when a household whose income is no greater than 140% of the income limit (or 170% for deep rent skewed projects) moves to a low-income unit in a different building within the project during any year of the 15-year credit period.37 The vacated unit assumes the status the newly occupied unit had immediately before it was occupied by the current resident.

Example 1: Household is First Occupant of Low-Income Unit

On May 31, 2004, of the first year of the credit period, an income qualified household moved into a new, never-occupied, low- income unit in Building A. On October 19, 2004, the household moved, *and the lease was transferred,* to a similar rent- restricted unit in Building B, which had never been occupied, and continued to occupy the unit until the end of the first credit year. The unit in Building A was not rented again until February 2005.

Only the unit the household actually occupies qualifies as a low- income unit.

  • The unit in Building A would qualify for May, June, July, August and September. The unit would not qualify as a low-income unit in October, November, or December for purposes of computing the Applicable Fraction for the first year under IRC §42(f)(2). The unit will continue to be treated as a never occupied unit until a qualified household moves in.

  • The unit in Building B is a qualified low-income unit for October, November, and December.

36 37

See Treas. Reg. 1.42-15(d). See IRC §42(g)(1) and IRC §142(d)(4)(B).


Revised October 2009

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