LIHTC Section 42 Compliance Audit Services — DC, Maryland & Virginia
Quick Answer: What is a LIHTC compliance audit?
A LIHTC (Low-Income Housing Tax Credit) compliance audit verifies that a Section 42 affordable housing property maintains tenant income eligibility, rent limits, and habitability standards throughout its 15-year compliance period. State housing finance agencies and LIHTC investors require annual compliance certifications, tenant file reviews, and independent CPA attestation reports.
Key LIHTC Compliance Terms
Qualified Basis
The portion of a LIHTC project's eligible basis that is actually occupied by qualified low-income tenants. The qualified basis determines how much tax credit the investor can claim. Any decrease in qualified basis due to non-compliant units can trigger IRS credit recapture.
Applicable Fraction
The lower of the unit fraction (low-income units ÷ total units) or the floor space fraction (low-income floor space ÷ total floor space). The applicable fraction is multiplied by the eligible basis to calculate the qualified basis each year.
Next Available Unit Rule
When a tenant's income exceeds 140% of the income limit, the next available unit of comparable or smaller size must be rented to an income-qualified tenant. Failure to comply with this rule causes the over-income unit to permanently lose its credit-eligible status until turnover.
LIHTC Compliance Risks We Help You Avoid
IRS recapture of tax credits for compliance failures — up to 15 years of credits plus interest can be clawed back
State HFA monitoring visits catch what internal reviews miss — tenant file errors, missing documentation, and rent overcharges
Tenant file errors (income verification, student status, TIC forms) are the #1 finding in HFA reviews — and the most preventable
Annual owner certifications (Form 8609) must reconcile with current tenant data — discrepancies are audit flags
Extended use agreements (30 years) require sustained compliance infrastructure that many property managers are not equipped to maintain
LIHTC Compliance Audit Services
From tenant file review to Form 8609 reconciliation, we provide the independent CPA attestation that LIHTC investors and state HFAs require.
Tenant Income Eligibility Testing
Independent review of tenant income certifications (TICs), supporting documentation, and income limit compliance for your LIHTC units. We identify errors before state HFA monitoring visits do.
Annual Owner Certification Review
Review of Form 8609 Part II certifications, applicable fraction calculations, and qualified basis schedules to ensure your annual filing to the IRS is accurate and defensible.
Extended Use Agreement Compliance
Ongoing compliance support for properties in the 15-to-30-year extended use period, including rent limit monitoring, set-aside verification, and covenant compliance reviews.
State HFA Audit Support
Preparation and response support for Maryland DHCD, Virginia HDA, and DC DHCD monitoring reviews. We help organize tenant files, prepare corrective action responses, and document findings remediation.
Form 8609 Reconciliation
Reconciliation of annual owner certifications against tenant rent rolls, unit mix, and applied income limits to identify discrepancies before they trigger IRS scrutiny or investor concerns.
Placed-in-Service Documentation Review
Review of placed-in-service documentation, original cost certifications, and qualified basis calculations to establish a clean compliance baseline for audits and investor reporting.
LIHTC Compliance Requirements by Property Type
| Property Type | Monitoring Method | CPA Report Type | Frequency |
|---|---|---|---|
| New Construction LIHTC | State HFA annual monitoring | AUP or full audit | Annual |
| Acquisition/Rehab LIHTC | State HFA + equity investor | Full audit | Annual |
| HUD/LIHTC Layered | HUD + HFA dual monitoring | Full audit + AUP | Annual |
| Tax Credit Pass-Through | LP investor requirement | CPA attestation | Annual |
Our LIHTC Compliance Audit Process
A 4-step process from tenant file review to CPA attestation report delivery.
Property and Investor Requirements Review
Confirm the specific attestation requirements from your state HFA and LIHTC equity investor — report format, procedures required, income limit AMIs, and set-aside percentages for each building.
Tenant File and TIC Review
Review a sample of tenant income certification files for completeness, accuracy of income calculation, supporting documentation, student status certifications, and signature compliance.
Form 8609 and Applicable Fraction Verification
Reconcile annual owner certifications with current tenant rent rolls, unit mix, and income limits. Identify and document any discrepancies requiring correction before submission.
CPA Attestation Report Issuance
Issue the agreed-upon procedures (AUP) report or full compliance audit opinion required by your state HFA and LIHTC investor, formatted to their specifications and delivered on time.
LIHTC Compliance in DC, Maryland & Virginia
Virginia
Virginia Housing (formerly VHDA) administers the LIHTC program in Virginia. Properties must comply with Virginia Housing's compliance monitoring plan, which includes annual tenant file reviews, physical inspections, and owner certification requirements.
Maryland
Maryland DHCD administers LIHTC compliance monitoring in Maryland. DHCD performs annual physical inspections and tenant file reviews, with findings requiring documented corrective action within 60 days.
Washington DC
DC DHCD administers the LIHTC program in the District. DC's affordable housing portfolio includes many HUD-layered LIHTC properties requiring dual compliance with both federal and DC monitoring requirements.
Virginia Housing, Maryland DHCD, and DC DHCD each have specific compliance monitoring procedures and report formats. Your Virtual CPA understands DMV-area HFA requirements and delivers attestation reports in the formats your agencies expect.
LIHTC Compliance Audit FAQs
Common questions from LIHTC property owners and managers in DC, Maryland & Virginia.
Protect Your Tax Credits. Maintain Your Compliance Record.
Don't let a tenant file error or missed recertification trigger credit recapture. Our LIHTC compliance audit team serves affordable housing properties throughout the DMV area.
Serving LIHTC property owners and managers in Virginia, Maryland, Washington DC, and the greater DMV area.