IRS Update: Extension Arrives in Unexpected Way
Posted by Mark Montgomery | February 22, 2021
A new year has brought exciting news: Our 36-unit Paradise Community Village will avoid the IRS fees that would drastically increase the project’s costs. As you may recall, we needed to rebuild Paradise Community Village in 25 months because of out-dated IRS rules governing properties built with Low-Income Housing Tax Credits (LIHTC). We set out to get an extension in 2019 with bi-partisan support from local leaders and Congress members. Late 2019, a letter of denial from the IRS showed us more work was need, and CHIP persisted.
Last month, the IRS provided a blanket extension to all properties because of the COVID-19 pandemic, which likely has delayed construction project timelines for many affordable housing developers. Initially, we thought it was too good to be true that this extension would apply to Paradise Community Village, but it checks out with our tax professionals. Paradise Community Village has its construction extension!
The extension didn’t come in the form we expected, but it’s what we needed. After two years of advocacy, making a strong case, and building support for the change we needed, the IRS dilemma is finally in the rearview mirror. Perhaps one day, the case for Paradise Community Village will still have its day on the legislative floor. There will undoubtedly be another major disaster that forces an affordable housing developer into the same dilemma. We look forward to seeing the law updated to be responsive to these new challenges.
We send a big “thank you” to our elected leaders for their advocacy and our partners for having our back from day one on this rebuild. Each day we get a little bit closer to welcoming home residents. As that day draws nearer, the past feels more distant, the future brighter, reminding us that rebuilding in Paradise is worth the fight.