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federalUnited StatesLow-Income Housing Tax Creditutility_allowance

An energy consumption model must weigh the prescribed factors and be prepared by a licensed engineer or an agency-approved qualified professional unrelated to the owner

lihtc.ua.energy_consumption_model_preparer_and_independence · v1.0.0

A building owner may calculate utility estimates using an energy and water and sewage consumption and analysis model. The model must at a minimum take into account unit size, building orientation, design and materials, mechanical systems, appliances, characteristics of the building location, and available historical data. The estimates must be calculated by a properly licensed engineer or other qualified professional, and that person and the owner must not be related within the meaning of section 267(b) or 707(b). Where the preparer is a qualified professional who is NOT a properly licensed engineer, the owner must obtain approval from the agency with jurisdiction before using them. Regardless of the preparer's type, the agency may approve or disapprove the model itself, or require information before permitting its use. Rates used must be no older than those in place 60 days before the start of the 90-day period.

The related-party test is section 267(b)/707(b), not a housekeeping independence standard: it reaches controlled entities and partnerships, so a consultant owned by an affiliate of the general partner fails it even where the engagement is at arm's length in every commercial sense.
Confidence
high
Effective from
2008-07-29
Last reviewed
2026-08-31

Citations

All sources verified within 1 day
  • Utility allowances
    26 CFR 1.42-10(b)(4)(ii)(E), required factors
    regulationSource ↗verified 1d ago
  • Utility allowances
    26 CFR 1.42-10(b)(4)(ii)(E), preparer and independence
    regulationSource ↗verified 1d ago
  • Utility allowances
    26 CFR 1.42-10(b)(4)(ii)(E), agency control
    regulationSource ↗verified 1d ago
  • Guide for Completing Form 8823, Low-Income Housing Credit Agencies Report of Noncompliance or Building Disposition
    Pub. 5913 (1-2024), Category 11m, A.9(6)
    persuasive_agency_guidanceSource ↗verified 1d ago