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Final regulations: Utility allowance rules, low-income housing credit (section 42)

Utility allowance rules, low-income housing credit

The U.S. Treasury Department and IRS today released for publication in the Federal Register final regulations (T.D. 9850) concerning the utility allowance rules as provided by section 42 and relating to the low-income housing credit.


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These final regulations [PDF 212 KB] adopt regulations that were proposed in 2016 with clarifications, and remove corresponding temporary regulations.

As noted in the preamble, the final regulations extend the principles of the current submetering rules. The current rules address situations when a building owner purchases a utility from a utility company and then separately charges the tenants for the utility. In these situations, if the utility costs paid by a tenant are based on actual consumption in the tenant’s submetered, rent-restricted unit and if certain other requirements are satisfied, then the charges for the utility are treated as paid by the tenant directly to the utility company, even though the payment passes through the building owner.

The final regulations extend these principles and apply to situations when a building owner sells to tenants energy that is produced from a renewable source and that the owner did not purchase from or through a local utility company.

The final regulations are scheduled to be published in the Federal Register on March 1, 2019.

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