Land Use Restriction Agreement Texas

LURA — The owner`s land use restriction agreement at the time of purchase, which sets out the owner`s obligation to comply with the occupancy, tenancy and resale restrictions on the owner`s property. So why does a homeowner or real estate investor with low-income real estate and LURA want to get confused? Tax credits. In exchange for land use restrictions, the LIHTC property owner receives tax credits that reduce federal income tax at the dollar-based basis. Tax credits also work with real estate. As a result, tax credits cannot be negotiated or sold individually. If LURA properties are sold, the sale may result in the new owner receiving tax credits. Termination of the LURA under LIHTC During the restriction period of the LIHTC program, land use restrictions are maintained, limiting the operation of apartment buildings. The specific length of time for which the restrictions are maintained is indicated in the LURA. The LURA restrictions end in one of three ways: 1) the qualified termination process; 2) by enforcement procedures; 3) by the natural course of the period (30 years or more). LURA walks with the country. This means that when the new owner is sold, he will have to comply with the terms of the LURA. Lenders must also declare themselves ready to be subordinated to the LURA. The initial 15-year compliance period is implemented by IRS rules.

The extension of the useful life, which is often an additional 15 years, is applied by state rules. Details can vary and can be found in the various LURA agreements. Multi-family real estate with a LURA contract or other regulatory contract (HAP contract) that limits rents and/or income is underwritten and treated differently from traditional market real estate. In addition, the terms, costs and interest rates of loans may differ from those of a market-rate property. Most multi-family lenders deal with real estate with a restrictive agreement under an affordable housing program, in which a special team of professionals specially trained in affordable housing depreciates, processes and enters into loans. The only projects eligible for points in this assessment category are those that include the renovation of residential buildings (currently in service) that were last commissioned before 2002 and for which 1) income restrictions were imposed by a land use limitation contract or LIHTC CCS, federal or local authorities for affordable housing, or 2) project-based rental aid for at least 60% (60%) units. Ground restrictions are maintained during periods of limitation and compliance. The termination of LURA is based on: (a) compliance and limitation deadlines naturally expire in accordance with the LURA agreement; b) silos of lenders; C) certain qualified termination procedures. LIHTC Tax Credits In exchange for submission to land use restrictions, LIHTC`s multi-family real estate owner receives a number of tax credits that allow dollar reductions for every dollar on their federal income taxes. LIHTC real estate receives tax credits each year for the first 10 years of the contract.

Tax credits are paid to the owner only because of his property on eligible property. Tax credits cannot be separated individually from the property, i.e.: You cannot sell tax credits. Since the tax credits remain on the property, an interest in the property can be sold, which results in the buyer receiving the tax credits. The restrictions imposed by the LRA can be defined by the period of compliance and the extension of the period of use. For example, the compliance period is 15 years and 15 years for the extended use period. The initial 15-year compliance period is imposed by IRS, HUD or other lodge authorities