By Vivian R. Probst
Managing Partner of The TheoPRO Group
Last week we talked about Line 8b of Form 8609. Today we’re going to show another important section of that form for management agents to understand if a project is in lease-up. New construction or acquisition/rehab—both will require us to know about credit delivery.
Line 10 a.
Line 10a is all about starting credit flow which is a BIG deal for owners/investors. That means it’s a BIG DEAL for managers as well. We must know the owners’ expectations because, we make it happen. WE turn on credit flow unit by unit as qualified family moves in for the first time.
As Line 10a suggests, owners have two options for beginning credit flow—the year the BIN/Building places in service or the next year. If you haven’t seen the 8609 election for your property, it’s wise to expect credit flow to start the year the BIN/Building is placed in service. Why? Because it’s the most common choice owners make. It’s even better if owners tell managers what their lease-up deadlines are.
Let’s paint a simple picture. It’s March 2021 as we craft this article. If a BIN places in service THIS year, owners decide whether or not to start credit flow this year or wait until next year. It’s either 2021 or 2022.
Pretend you’re an owner and you can elect to start your tax benefits this year or next year. What would you choose? If you’re thinking, “I’d like them to start right now!”, you’re on the primary track. Once a BUN/Building places in service, it’s time to get qualified households into units. Some owners might want to delay until the following year, but do your owners a favor and get going.
Promises between the developer(general partner) and owner/investor (limited partner) about when credit delivery will begin are made many months in advance of a BIN/Building’s placed in service date. Furthermore, limited partners hold general partners accountable to what was promised—guaranteed-- which means general partners need their management agents to meet these important goals.
Want to know more? Get to theopro.thinkific.com where all of TheoPRO’s on-line education courses are available for your listening pleasure.
Next week…The 8609 Line 10c