PLR 9942049: Updated area purchase price limits for housing bonds

Plain-English summary

A housing authority submitted local sales data to support new average area purchase price limits for single-family homes. The IRS found the data more accurate and comprehensive than the figures used for an earlier published safe harbor. It approved the listed limits for new and existing homes in the specified areas. The authority could rely on those limits for up to 30 months after the end of the data period when issuing mortgage credit certificates and qualified mortgage bonds. The ruling did not address other tax consequences of those programs.

Ruling snapshot

• Question: Could the authority use its submitted local home price limits instead of the published safe harbor limits?
• Outcome: Approved for the listed areas and prices for the stated 30-month period.
• Key authorities: IRC §§ 143, 25; Temp. Treas. Reg. § 6a.103A-2(f)(5)(i).

Full text (IRS public release)

Internal Revenue Service Department of the Treasury

199942049

Index Number: 143.07-00 Washington, DC 20224

Person to Contact:
Telephone Number:
Refer Reply To:

CC:DOM:FI&P:5-PLR-107847-98
Date:

JUL 23 1999

Legend

Authority =

Authority
A =
B =
C =
D =
E =
F =
G =
H =
I =

Dear

This replies to your ruling request on behalf of the Authority concerning the use of average area purchase price limitations based upon more accurate and comprehensive data than that used to calculate the safe harbor limitations published in Rev. Proc. 94-55, 1994-2 C.B. 716. The Authority submitted data concerning sales of new single-family residences for certain metropolitan statistical areas and for all other

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PLR-107847-98

areas for the 12-month period from January 1, 1998 to December 31, 1998. The Authority also submitted data concerning sales of existing single-family residences for certain metropolitan statistical areas and a county for the same period. The data submitted conforms with the definitions for the nation’s metropolitan areas established in Office of Management and Budget Bulletin 98-06, dated June 23, 1998, and effective June 30, 1998.

Based on the information submitted and representations made, we conclude that the calculations submitted by the Authority, in the cases of new and existing single- family residences, are based upon more accurate and comprehensive data than that used for calculating the limitations published in Rev. Proc. 94-55, and may be used by the Authority as provided by §6a.103A-2(f)(5)(i) of the Temporary Income Tax Regulations.

Accordingly, the following are the new safe harbor limitations for single-family residences justified by the documentation received:

New
Existing
Statistical Area Construction Housing
A $156,332 $128,325
B 194,228 101,089
C 207,517 199,512
D --------- 127,439
E --------- 93,891
F --------- 95,466
G 145,140 104,163
H 178,386 101,639
I 155,265 ---------

The figures approved above may be relied upon for a period of not more than 30 months following the termination date of the 12-month period used by the Authority to compute the average area purchase price limitation for purposes of issuing mortgage credit certificates under § 25 and qualified mortgage bonds under § 143 of the Internal Revenue Code (“Code”).

Except as specifically ruled above, no opinion is expressed concerning the effect of this transaction under any section of the Code, including § 143.

This ruling is addressed only to the taxpayer who requested it. Section 6110(k)(3) of the Code provides that it may not be used or cited as precedent.

PLR-107847-98

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In accordance with the Power of Attorney on file with this office, a copy of this letter is being sent to the taxpayer.

Sincerely yours,

Assistant Chief Counsel
(Financial Institutions & Products)

By:
Timothy L. Jones

Assistant to the Chief
Branch 5

Enclosure (1)