Units must be used on other than a transient basis and the project must not be a hotel, dormitory or similar facility
bond.lease.non_transient_use · v1.0.0
Units in a qualified residential rental project must be used on other than a transient basis. The regulation names the facility types that are categorically excluded: hotels, motels, dormitories, fraternity and sorority houses, rooming houses, hospitals, nursing homes, sanitariums, rest homes, and trailer parks and courts for use on a transient basis. The IRS has restated the requirement as a live condition of section 142(d) compliance in Rev. Proc. 2014-50. Section 142(d) fixes no minimum lease term of its own, so the six-month minimum lease a compliance officer applies on a 4% deal is a section 42 rule, not a bond rule; a bond-only project applying a six-month lease is meeting a requirement no bond authority imposes, and a bond project with month-to-month leasing is not for that reason alone transient.
- Confidence
- high
- Effective from
- 1986-10-22
- Last reviewed
- 2026-08-30
Evidence required
- Executed lease agreement(one_per_unit)
Citations
All sources verified within 1 day- Interest on bonds to finance certain exempt facilities - paragraph (b), residential rental property26 CFR 1.103-8(b)(4)(i) - non-transient use and the excluded facility types
- Major disaster relief for bond-financed qualified residential rental projectsRev. Proc. 2014-50, section 2.02(5) - the IRS treating the regulation as operative
- Internal Revenue Code Section 142 - Exempt facility bond, including 142(d) qualified residential rental project26 U.S.C. 142(d)(2)(D) - Single-room occupancy units