To verify if your lease agreement includes a tax credit, follow these steps:
1. Review Lease Terms for Tax Credit References
Check for explicit mentions of tax credit programs such as Low-Income Housing Tax Credits (LIHTC) or HOME compliance in your lease documents. These programs often require landlords to follow specific rental terms, including income limits and rent caps.
2. Confirm Income and Rent Compliance
- Income Verification: Landlords participating in tax credit programs must maintain signed tenant income certifications (TICs) and third-party income documentation.
- Rent Limits: Ensure your rent does not exceed program-specific maximums (e.g., HPD-LIHTC guidelines).
- Utility Allowances: Verify compliance with utility cost standards outlined in tax credit programs.
3. Consult the Property Owner/Manager
Request written confirmation from the landlord about their participation in tax credit programs. For LIHTC properties, landlords are required to keep records of compliance for up to 21 years.
4. Check Program-Specific Clauses
Look for lease terms requiring minimum lease durations (e.g., 6 months for initial LIHTC leases) or restrictions on rent increases tied to tax credit rules.
5. Verify IRS or HPD Compliance
- IRS Guidelines: For federal tax credits, ensure your lease is not classified as a conditional sales contract (which affects tax treatment).
- NYC HPD Compliance: Review whether the property is listed as part of HPD’s tax credit portfolio.
6. Seek Professional Assistance
If documentation is unclear, consult:
- HPD’s Tax Credit Compliance Manual
- NY State tax credit instructions
- A tax professional or housing attorney for lease reviews.
Records to cross-check include signed TICs, utility allowance documentation, and rent ledgers.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-steps-should-i-take-to-verify-if-my-lease-agreement-includes-a-tax-credit/
