Compliance - General Casualty Loss Information for HTC properties during the Compliance Period

• Memorandum CCA 200134006 - IRC Section 42 - Low-income housing credit (PDF)

Definition of Casualty Loss: Damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. Owners should be able to prove that casualty losses were the direct result of the casualty and not as a result of normal use, an owner’s willful negligence, or progressive deterioration.

If your property suffered casualty loss due to a disaster for which the president issued a major disaster declaration, visit the Disaster Relief page.

Owners & Housing Credit Agencies are required to do the following in the event of a casualty loss:

1. Within 30 days of the event, the owner must notify the Department that a casualty loss has occurred by completing the “Notice of Casualty Loss” form. The form must be uploaded to the Development’s Compliance Monitoring and Tracking System account to the attention of Benjamin Barker. Below there is a link to the required form. On the Unit Status Report, please mark units impacted by casualty loss as “down”.
2. For Housing Tax Credit Developments within the compliance period, Form(s) 8823 will be filed with the IRS by the Department. The Department must report any casualty loss that takes low-income property in whole or in part out of service and results in a reduction in qualified basis. Findings will be entered under category 11c “Violation(s) of the UPCS or Local Inspection Standards”.
3. The Owner must restore the property within the time period specified by The Department, but in no case any later than 2 years from the end of the tax year in which the casualty loss occurred.
4. Upon completion of repairs, but no later than the 2 year period listed above, the Owner must notify the Department that the property has been restored by completing the “Notice of Property Restoration” form. The form must be uploaded to the Development’s Compliance Monitoring and Tracking System account to the attention of Benjamin Barker. Below there is a link to the required form.
5. Any developments not completely restored by the end of the second calendar year from when the loss occurred will be reported to the IRS on form 8823 under category 11e “Changes in Eligible Basis”.

Forms

• Notice of Casualty Loss (DOC form)
• Notice of Property Restoration (DOC form)

For more information, contact Manuel Pena, Jr. at (512) 475-0207 or email: manuel.pena@tdhca.texas.gov or Benjamin Barker at (512) 475-3887 or email: benjamin.barker@tdhca.texas.gov