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March 26, 2021

IRS issues guidance for mortgage bond issuers to use in computing IRC Section 143(f) income requirements

In Revenue Procedure 2021-19, the IRS explains how issuers of qualified mortgage bonds (IRC Section 143(a)) and mortgage credit certificates (IRC Section 25(c)) should use US and area median gross income figures to compute income requirements under IRC Section 143(f). The guidance requires issuers to use the income figures that the Department of Housing and Urban Development (HUD) either (1) released most recently or (2) released immediately before those most recent figures. For a 90-day transition period immediately after HUD releases income figures in a current calendar year, issuers may opt to use income figures that HUD released in the second calendar year prior to the current year. The IRS has also provided (Revenue Procedure 2021-17) issuers with (1) the nationwide average purchase price for US residences, and (2) average purchase price safe harbors for residences in statistical areas in each state and US territory.