Issuance costs financed by the issue may not exceed 2 percent of proceeds

bond.financial.issuance_costs_two_percent_limit · v1.0.0

A private activity bond is not a qualified bond if the issuance costs financed by the issue of which it is part exceed 2 percent of the proceeds of the issue. A separate 3.5 percent figure applies only to qualified mortgage bonds and qualified veterans' mortgage bonds of $20,000,000 or less, and does not reach multifamily exempt facility bonds. Like the 95 percent test this is fixed at issuance and cannot be cured, so its relevance to ongoing compliance is that it is a permanent condition of the bonds' qualification which an operator or a buyer inherits without any ability to affect it. Costs of issuance in excess of 2 percent are commonly paid from equity precisely so that they are not financed by the issue.

Confidence

medium

Effective from

1986-10-22

Last reviewed

2026-08-30