15 AAC 151.140. Qualified rehabilitation loan

A person is eligible under the program for a qualified rehabilitation loan as provided in this section:

(1) The term "qualified rehabilitation loan" means any owner financing provided in connection with;

(A) a qualified rehabilitation; or

(B) the acquisition of a residence with respect to which there has been a qualified rehabilitation; but only if the mortgagor to whom such financing is provided is the first resident of the residence after completion of the rehabilitation. Where there are two or more mortgagors of a rehabilitation loan, the first residency requirement is met if any of the mortgagors meets the first residency requirement.

(2) The term "qualified rehabilitation" means any rehabilitation of a residence if:

(A) there is a period of at least 20 years between the date on which the building was first used and the date on which physical work on such rehabilitation begins;

(B) 75 percent or more of the existing external walls of such building are retained in place as external walls in the rehabilitation process; and

(C) the expenditures for such rehabilitation are 25 percent or more of the mortgagor's adjusted basis in the residence (including the land on which the residence is located) as defined by the Code.

(3) For purposes of (1)(A) and (B) above, the rules applicable to the investment tax credit for qualified rehabilitated buildings under section 48(g)(1)(A)(iii) and (B) of the Internal Revenue Code of 1954, as amended, shall apply. However, unlike section 48(g)(1)(B), once a building meets the 20-year test, more than one rehabilitation of that building within a 20-year period may qualify as a qualified rehabilitation;

(4) The amounts expended by the mortgagor for rehabilitation include all amounts expended for rehabilitation regardless of whether the amounts expended were financed from the proceeds of the loan or from other sources, and regardless of whether the expenditure is capital expenditure, so long as the expenditure is made during the rehabilitation of the residence and is reasonably related to the rehabilitation of the residence. The value of services performed by the mortgagor or members of the mortgagor's family (as used in 15 AAC 151.125) in rehabilitating the residence will not be included in determining the rehabilitation expenditures for purposes of the 25 percent test; and

(5) Where a mortgagor purchase a residence that has been substantially rehabilitated, the 25 percent test is determined by comparing the total expenditures made by the seller for the rehabilitation of the residence with the acquisition cost of the residence to the mortgagor. The total expenditures made by the seller for rehabilitation do not include the cost of acquiring the building or land but do include all amounts directly expended by the seller in rehabilitating the building (excluding overhead and other indirect charges).

History: Eff. 5/7/93, Register 130

Authority: AS 18.56.088

AS 18.56.098

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