LIHTC compliance software that keeps every certification review ready
LIHTC compliance is the ongoing obligation attached to the Low Income Housing Tax Credit under Internal Revenue Code Section 42: keeping qualifying households in qualifying units, at restricted rents, certified and documented, across a 15 year compliance period and an extended use period usually running at least 30 years. State agencies review files and inspect units at least once every 3 years under 26 CFR 1.42-5, and findings go to the IRS on Form 8823. Neurobird keeps the file ready.
Neurobird LIHTC Compliance in short
- Track every tenant income certification and recertification against its due date
- Apply current income and rent limits by set aside so nobody is certified against last year's numbers
- Hold third party verifications with the certification they support, not in a separate folder
- 42 Internal Revenue Code Section 42 creates the Low Income Housing Tax Credit and every compliance obligation that follows from it, including the 15 year compliance period. US Code, 26 U.S.C. 42
- 1.42-5 The compliance monitoring regulation at 26 CFR 1.42-5 sets what state agencies must review, how often units are inspected, and what records owners must keep. eCFR, 26 CFR 1.42-5
- Pricing runs 130 to 540 US dollars per month across 3 tiers. Early access is free.
What LIHTC owners and property managers actually deal with
Why it stays broken
Property management software is built to collect rent, and Section 42 is built around a certification file. So compliance runs in a parallel set of spreadsheets and paper folders, rebuilt every time the 1.42-5 review cycle comes around.
One unit certified against last year's income limit can put the whole building's credit at risk.
Full-time student households must meet one of the exceptions continually to live in an LIHTC unit for the period that everyone is a full-time student.
Neurobird LIHTC Compliance Platform
Hold the certification and its verifications as one object, versioned by year, with the current limits applied automatically. Review readiness stops being a project.
- 1Track every tenant income certification and recertification against its due date
- 2Apply current income and rent limits by set aside so nobody is certified against last year's numbers
- 3Hold third party verifications with the certification they support, not in a separate folder
- 4Monitor the applicable fraction and set aside so a unit change does not quietly break the test
What changes with Neurobird LIHTC Compliance?
The same work, read left to right: how it runs today, and how it runs once the record is in one place.
| Today | With Neurobird LIHTC Compliance |
|---|---|
| The tenant income certification is only as good as the third party verifications behind it, and those arrive by fax over weeks | Track every tenant income certification and recertification against its due date |
| Income and rent limits change annually and somebody has to reapply them across every unit before the next certification | Apply current income and rent limits by set aside so nobody is certified against last year's numbers |
| The state agency inspects and reviews files on a 3 year cycle, and a finding becomes a Form 8823 that goes to the IRS | Hold third party verifications with the certification they support, not in a separate folder |
Who is this for?
Same code section, three different positions.
You take the applications
You are the one chasing a third party verification that has not come back. You need the certification file to show exactly what is missing.
You review before the agency does
Your job is to find the problem first. You need consistent files across properties so a review is a sample, not a reconstruction.
You carry the credit risk
A Form 8823 finding reaches the IRS. You need portfolio wide visibility on set aside, applicable fraction and cure status.
The certification, as your specialist would run it
A working preview. Tick an item to advance the file.
| Requirement | Status | Next due | |
|---|---|---|---|
| Student status verification | current | in 42d | |
| Form 8609 line 8b election | due soon | in 9d | |
| State agency file review, 20 percent | current | in 120d | |
| Income limit update, 60 percent AMI | overdue | 3d late | |
| Unit 214, annual recertification due | current | in 64d |
Tick a requirement to file evidence against it.
What Section 42 actually requires
Useful if you own or manage credit properties. Each source links out.
Internal Revenue Code Section 42 creates the Low Income Housing Tax Credit and every compliance obligation that follows from it, including the 15 year compliance period.
US Code, 26 U.S.C. 42The compliance monitoring regulation at 26 CFR 1.42-5 sets what state agencies must review, how often units are inspected, and what records owners must keep.
eCFR, 26 CFR 1.42-5Form 8609 is issued per building by the state housing credit agency and carries the minimum set aside election the property lives with for its whole compliance period.
IRS, About Form 8609Form 8823 is how a state agency reports noncompliance or a building disposition to the IRS, which is why file review findings carry real consequence.
IRS, Form 8823State agencies must inspect units and review supporting documentation at least once every 3 years under the federal monitoring rules.
eCFR, 26 CFR 1.42-5How does Neurobird LIHTC Compliance work?
Build the certification file
The tenant income certification, every third party verification and the signed forms live together, so nothing supports a certification from a different folder.
Apply the right limits
Income and rent limits are held by year and by set aside, so a recertification is never run against a superseded table.
Stay review ready
Unit status, applicable fraction and the 3 year review cycle under 26 CFR 1.42-5 are tracked continuously, so a state agency visit is a read rather than a scramble.
Lihtc compliance software questions, answered
Key terms
- What is LIHTC compliance?
- LIHTC compliance is the ongoing obligation attached to the Low Income Housing Tax Credit under Internal Revenue Code Section 42: keeping qualifying households in qualifying units, at restricted rents, certified and documented, for a 15 year compliance period and a longer extended use period, usually at least 30 years in total.
- What are Forms 8609 and 8823?
- Form 8609 is the low income housing credit allocation and certification issued by the state housing credit agency for each building, and it carries the elections the property will live with. Form 8823 is the report of noncompliance or building disposition that the state agency files with the IRS when it finds a problem.
- What is the minimum set aside?
- The owner elects a minimum set aside on Form 8609: 20 percent of units at 50 percent of area median income, 40 percent at 60 percent, or the average income test where units average no more than 60 percent across designated income levels. The election is irrevocable and it governs every subsequent certification.
How often does a state agency review files?
Under the monitoring rules in 26 CFR 1.42-5, state agencies must review tenant certifications and supporting documentation and physically inspect units on a recurring cycle, at least once every 3 years, with a sample of units drawn at each property.
Does this replace our property management system?
No. Rent roll and accounting stay where they are. This holds the compliance layer: certifications, verifications, limits by year, unit status and the evidence a state agency reviewer asks to see.
Why we are building this
The housing credit is an annual tax position that depends on a paper file assembled at a leasing office. That is the whole risk in one sentence. Section 42 does not care how good your rent roll is if the income certification behind unit 214 is missing a verification.
Every year the limits change, every 3 years the state agency reviews, and every finding travels to the IRS on a Form 8823. Most of that runs on spreadsheets and binders.
We would rather build this with people who prepare the files. Tell us how your compliance actually works, and where we have got it wrong.
Where the requirement comes from
The statute, the monitoring rule and the forms behind the credit.
- 26 U.S.C. 42, low income housing credit The statute that creates the credit, the compliance period and the recapture rules.
- 26 CFR 1.42-5, compliance monitoring What state agencies must monitor, how often, and what records owners must retain.
- IRS, About Form 8609 The allocation and certification form carrying the minimum set aside election per building.
- IRS audit technique guides IRS examination guidance, including the material examiners use on the housing credit.
How much does Neurobird LIHTC Compliance cost?
Priced per property because compliance is monitored per property. Units, certifications and users are unlimited on every tier.
- Certification tracking
- Recertification due dates
- Income and rent limits by year
- Unit status
- Email support
- Everything in Single property
- Third party verification storage
- Applicable fraction monitoring
- Review readiness pack
- Named contact
- Everything in Portfolio
- Multi property roll up
- Form 8609 election register
- Finding and cure tracking
- Onboarding included
Get free early access
If you handle Section 42 compliance, tell us how certifications and verifications are held today.
Straight answer on where this is: In development. Early access gets the working preview, a say in what ships first, and early access pricing. It does not get you a login today.
Prefer email? Write to office@neurobird.com and a person will reply. No autoresponder.