The 142(d) set-aside is elected by the bond issuer at issuance and must be met at all times during the qualified project period

bond.set_aside.issuer_election_20_50_or_40_60 · v1.0.0

A project financed with exempt facility bonds is a qualified residential rental project only if, at all times during the qualified project period, it meets either the 20-50 test (20 percent or more of the residential units occupied by individuals whose income is 50 percent or less of area median gross income) or the 40-60 test (40 percent or more of the residential units occupied by individuals whose income is 60 percent or less of area median gross income), whichever the ISSUER elected at the time the issue was issued. The 142(d) election is a separate instrument from the section 42 minimum set-aside elected on Form 8609 line 10c: it is made by a different party, at a different moment, and the two may differ on the same property. Section 142(d)(1) offers only these two tests. There is no average income option on the bond side, so a property may run the section 42 average income test and the bond 40-60 test simultaneously.

Confidence

high

Effective from

1986-10-22

Last reviewed

2026-08-30