Compliance - General Casualty Loss Information for HTC properties during the Compliance Period
General Casualty Loss Regulations
- Treasury Regulation Section 42(j)(4)(E) (PDF)
- Memorandum CCA 200134006 - IRC Section 42 - Low-income housing credit (PDF)
Definition of Casualty Loss: Damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. Owners should be able to prove that casualty losses were the direct result of the casualty and not as a result of normal use, an owner’s willful negligence, or progressive deterioration.
If your property suffered casualty loss due to a disaster for which the president issued a major disaster declaration, visit the Disaster Relief page.
Under the above regulations, Owners & Housing Credit Agencies are required to do the following in the event of a casualty loss:
- The Owner must notify The Department that a casualty loss has occurred by completing and mailing or faxing to The Department the “Notice of Casualty Loss” form below. Any casualty loss information must also be entered on the Annual Owner’s Compliance Report (AOCR) at the end of any year in which a unit or building was off-line for repair.
- Form(s) 8823 will be filed with the IRS by The Department. The Department must report any casualty loss that takes low-income property in whole or in part out of service and results in a reduction in qualified basis. Findings will be entered under category 11c “Violation(s) of the UPCS or Local Inspection Standards” as long as they are repaired during the allotted time period.
- The Owner must restore the property within the time period specified by The Department, but in no case any later than 2 years from the end of the tax year in which the casualty loss occurred.
- Upon completion of repairs, but no later than the 2 year period listed above, the Owner must notify The Department that the property has been restored by completing and mailing The Department the “Notice of Property Restoration” form below.
- Any developments not completely restored in whole or in part at the end of the 2 year period will be subject to a reduction in eligible basis and/or credit recapture.
For more information, contact Meg Tynan at (512) 475-0697 or email: email@example.com