federalUnited StatesLow-Income Housing Tax Creditutility_allowance

A HUD-regulated building must use the applicable HUD utility allowance

lihtc.ua.hud_regulated_building_uses_the_hud_allowance · v1.0.0

If neither a building nor any tenant in it receives RHS housing assistance, and the rents and utility allowances of the building are regulated by HUD, the applicable utility allowance for all rent-restricted units in the building is the applicable HUD utility allowance. The condition is that HUD regulates BOTH the rents and the allowances -- a building with a HUD-insured mortgage but market rents is not HUD-regulated for this purpose. For the Office of Multifamily Housing programs listed in Notice H-2015-04, the HUD allowance is the one produced by the utility analysis that notice prescribes, so the LIHTC allowance for such a building is settled by the Section 8 or Section 236 process rather than by any section 42 election.

Pub. 5913's own example of noncompliance under this branch is exactly this: 'For example, an owner uses a local utility company's estimate for a HUD-regulated building.' Note also that TDHCA treats every HOME development as a HUD-regulated building for this purpose (tx.home.utility_allowance.mfdl_units_treated_as_hud_regulated_buildings), which is a state reading of a federal term, not a federal rule.

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)(3)
regulationSource ↗verified 1d ago
Methodology for Completing a Multifamily Housing Utility Analysis
Notice H-2015-04, Part I, Purpose
binding_agency_guidanceSource ↗verified 1d ago