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federalUnited StatesLow-Income Housing Tax Creditutility_allowance
The basis of the utility allowance must be reviewed at least once during each CALENDAR year, taking building changes and rate changes into account
lihtc.ua.review_at_least_once_during_each_calendar_year · v1.0.0
A building owner must review, at least once during each calendar year, the basis on which utility allowances have been established, and must update the applicable allowance under 1.42-10(c)(1). The review must take into account any changes to the building, such as energy conservation measures that affect energy consumption, and changes in utility rates. The interval the regulation states is the calendar year, not a rolling twelve months: an allowance last reviewed in one calendar year and not reviewed at all in the next is out of compliance as of 31 December of the year that was skipped, however few months have elapsed.
Pub. 5913 Category 11m, A.7(3) adds two permissions that agencies frequently overlook: 'Owners may use different methods for computing the allowances for different utilities' and 'Owners are not prohibited from changing methods used for calculating a utility allowance in order to most accurately estimate the utility allowance.' Several states restrict both -- Kansas bars per-utility mixing and allows one methodology change a year, Maine locks the method for the extended use period -- so the federal permission is the floor a state narrows, not a right an owner can assert against its agency.
- Confidence
- high
- Effective from
- 2008-07-29
- Consequence model
- agency finding with cure
- Last reviewed
- 2026-08-31
Evidence required
- Utility allowance documentation(one_per_year)
Citations
All sources verified within 1 day- Utility allowances26 CFR 1.42-10(c)(2)
- Guide for Completing Form 8823, Low-Income Housing Credit Agencies Report of Noncompliance or Building DispositionPub. 5913 (1-2024), Category 11m, C(4), Example 2