1. Acquisition/ Rehabilitation

2.  There are two types of acquisition/rehabilitation properties: Vacant  Vacant acq/rehabs are similar to new construction and follow those rules when leasing up Occupied  Occupied Acq/Rehabs are more challenging and will be discussed further in this presentation

3. First Year of the Credit Period  Determining the First Credit Year Most important issue to be eligible to start credits is the date resident eligibility is certified Once the rehabilitation threshold is met, the second placed in service date is chosen, and the project is able to earn rehab credits Credits may be claimed for both acq/rehab back to the date of acquisition or the first day of their fiscal year, dependent on the rehab placed in service date

4. First Year of the Credit Period, con’t  Determining the First Credit Year Claiming credits back to the date of acquisition, all units that credit is being claimed for must be certified as eligible households as of the purchase date For acq/rehab properties, both the acquisition and rehabilitation credit must be claimed in the same time period. Credit cannot be claimed in years prior to the rehab placed in service year Credit can be claimed back to the date of acquisition only if the rehab was completed in the same fiscal year. If the rehab was completed in a later fiscal year, credit can only be claimed as of the first day of the fiscal year

5. Acquisition/Rehabilitations  Requirements: Must be completed in a two year time frame Required Rehab threshold must be met All residents must be certified All residents should be income-eligible and rent restricted plus meet all other LIHTC requirements

6. LIHTC Properties involving Acquisition and Rehabilitation  Two Important considerations in determining when credit can begin claimed: The earliest possible date from which credit can be claimed The date on which existing residents must be certified as income-eligible

7. Existing Residents  Certifying existing residents Acquisition Date Rehabilitation Completion Year New move in resident

8. Acquisition Date  Certifying residents on the Acquisition Date: Residents can be certified 120 days before and/or 120 days after the acquisition date Tenant Income Certification’s effective date is the acquisition date Income and rent limits to be used are the limits that are in effect as of the acquisition date or the first building’s PIS date that will be on the 8609’s determines the limits to use Rehab must be completed within the same year as the acquisition date to claim credits from the acquisition date

9. Rehabilitation Year  Certifying residents in the second year of the acq/rehab: Existing residents must be certified on January 1 st of the second year to start claiming credits Residents must be certified 120 days before January 1 st Tenant Income Certification’s effective date is January 1 st of the rehab completion year Income and rent limits that are in effect as of January 1 st should be used or if you know the PIS date of the first building that was placed in service on the property drives the limits to use

10. New Move in Resident  Certifying residents after the Acq/Rehab dates: Residents certified after the Acq/Rehab dates are considered a new move in resident Tenant Income Certification’s effective date will be the actual move in date Income and rent limits that are in effect at the time of the move in should be used

11. Examples when to Certify Residents  Acq Date and Rehab Date are in the same year: Assume the fiscal year is January 1 to December 31 calendar year All of the examples will assume that there is only one unit in each building

12. Example #1  Existing Resident was certified within 120 days of the AcquistionDate: Acquisition Date: 2/10/2015 Rehab PIS date: 11/30/2015 Earliest Date resident can be certified : 2/10/2015  Resident is certified as LIHTC-eligible within 120 days before or after 2/10/2015  Both the acquisition credits and the rehabilitation credits can be claimed from this date

13. Example #2  Existing Resident not certified within 120 days after the Acq Date: Acquisition Date:2/10/2015 120 days after Acquisition Date:6/10/2015 Resident Certified as LIHTC-eligible:6/24/2015 Rehab PIS Date:11/30/2015 Earliest Date resident can be certified: 6/24/2015

14. Example # 3  Existing resident not certified until after the rehab PIS date: Acquisition Date:2/10/2015 Rehab PIS Date:11/30/2015 Date Resident Certified as LIHTC-eligible:12/15/2015 Earliest Date resident can be certified: 12/15/2015

15. Example #4  Acq Date and Rehab PIS date are in DIFFERENT fiscal years: Acquisition Date:2/10/2015 Rehab PIS Date:4/14/2016 Latest Date resident can be certified: 1/1/2016  Provided the resident is certified as LIHTC-eligible within 120 days before 1/1/2016 date  If resident were certified prior to 1/1/2016 income must be retested as of 1/1/2016. Per 2003-82, safe harbor test.

16. Conclusion  Important dates that are essential for you to know when certifying the existing residents: Acquisition Date Rehabilitation Date

17. Over Income Residents  Options Relocation of resident Moving Incentives  Free rent at new apartment complex that they are moving too.  Pay for moving expenses  New Color TV  Cold Hard Cash

18. Over Income Residents con’t  Options Mixed Use property  Move resident to a market unit  Change the unit set aside to an acceptable level Accept the two-thirds credits on the unit.  As an investor this is something we need to avoid.