Low-Income Housing Credit Allocation Increases for Disaster Zones May Be Reallocated Outside Disaster Zones, Rev. Rul. 2024-5

For purposes of the low-income housing credit, the IRS concluded that additional housing credit dollar amounts (HCDAs) for 2021 and 2022 that are returned to a state housing agency may be reallocated to projects that are not in disaster zones. The additional allocations were authorized by the Taxpayer Certainty and Disaster Tax Relief Act of 2020, div. EE (P.L. 116-260).

State agencies could allocate the additional HCDAs in 2021 and 2022, but only to buildings in qualified disaster zones. However, these additional allocations were taken into account in the population component of a state’s housing credit ceiling for the purpose of determining the unused state housing credit ceiling for any calendar year. In addition, the need for an increase in the state’s housing credit ceiling implies that a qualified disaster zone allocation comes out of the state’s housing credit ceiling for that year. Finally, once they were allocated, these HCDAs have no statutory attributes that distinguish them from any other allocations that were made from the allocation-year ceiling.

Accordingly, any returned allocations are part of the agency’s overall returned credit component. Thus, the agency’s reallocations of these returned amounts are not restricted to projects located in qualified disaster zones.