Low Income Housing Tax Credits (LIHTC)
DOZ provides annual audit services to over 1,000 entities that own affordable housing communities financed in part with capital contributions received from the sale of the Low Income Housing Tax Credit (LIHTC). We are particularly experienced with the unique accounting and auditing concepts associated with these engagements, including:
- Compliance with entity formation documents (guarantees, cash flow uses, entity fees, etc.),
- Loan or grant documents (use restrictions, cash flow restrictions, etc.),
- Initial lease up,
- Development capitalization,
- Compliance with provisions of Section 42 of the Internal Revenue Code, and
- Many of the operating entities we audit are financed with tax-exempt private activity bonds and the 4% LIHTC, which may include the use of highly complex derivative instruments.
Our firm has become well known and respected nationally for its expertise relative to the LIHTC program. Our services include:
- Assistance with the LIHTC application process required to receive a reservation of LIHTC,
- 10% cost certifications required to carryover LIHTC reservations,
- Review of entity formation and loan documents,
- Assistance in the negotiations with syndicators and lenders,
- Final cost certifications required for issuance of IRS form(s) 8609,
- Agreed upon procedure engagements for compliance monitoring,
- Arbitrage rebate calculations relative to tax-exempt bond financed properties, and
- Consultation with respect to partner interest valuations and exit strategies.
DOZ provides audit and related services to over 100 syndicated funds that have been formed to invest in properties that are eligible for the LIHTC and/or Historic Tax Credits (HTC). These are both single and multi-investor funds, and may require the consolidation of dozens of properties or adherence to equity method accounting principles. The partners in these funds include national, regional, and local banks, insurance companies, and various non-financial corporations. The funds audited by DOZ have invested approximately $2 billion in 700 operating entities.