qualified expenses and interest

(5) Exception for certain expenses and interest of partnerships owning low-income housing (A) In general This subsection shall not apply with respect to qualified expenses and interest paid or incurred by a partnership owning low-income housing to— (i) any qualified 5-percent or less partner of such partnership, or (ii) any person related (within the meaning of subsection (b) of this section or section 707(b)(1) ) to any qualified 5-percent or less partner of such partnership. (B) Qualified 5-percent or less partner For purposes of this paragraph, the term “qualified 5-percent or less partner” means any partner who has (directly or indirectly) an interest of 5 percent or less in the aggregate capital and profits interests of the partnership but only if— (i) such partner owned the low-income housing at all times during the 2-year period ending on the date such housing was transferred to the partnership, or (ii) such partnership acquired the low-income housing pursuant to a purchase, assignment, or other transfer from the Department of Housing and Urban Development or any State or local housing authority. For purposes of the preceding sentence, a partner shall be treated as holding any interest in the partnership which is held (directly or indirectly) by any person related (within the meaning of subsection (b) of this section or section 707(b)(1) ) to such partner. (C) Qualified expenses and interest For purpose of this paragraph, the term “qualified expenses and interest” means any expense or interest incurred by the partnership with respect to low-income housing held by the partnership but— (i) only if the amount of such expense or interest (as the case may be) is unconditionally required to be paid by the partnership not later than 10 years after the date such amount was incurred, and (ii) in the case of such interest, only if such interest is incurred at an annual rate not in excess of 12 percent. (D) Low-income housing For purposes of this paragraph, the term “low-income housing” means— (i) any interest in property described in clause (i), (ii), (iii), or (iv) of section 1250(a)(1)(B), and (ii) any interest in a partnership owning such property.

Source

26 USC § 267(e)(5)


Scoping language

For purposes of this paragraph
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