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RCED-85-112 1 (1985-07-10)

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BrY THE U.S. GENERAL ACCOUNTING
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Report To The Honorable Donald W. Riegle, Jr.

United States Senate


Impact Of Federal Tax Provisions On

Resyndication of Federally Assisted

Rental Housing


The sale of used rental properties to new groups of
investors (resyndication) has become an increasingly
popular way of obtaining investment in low-income rental
housing administered by the Department of Housing and
Urban Development (HUD). This report provides infor-
mation on the tax incentives for resyndicated HUD rental
housing under (1) tax laws in effect from 1969 to 1980, (2)
the Economic Recovery Tax Act of 1981, and (3) the
Deficit Reduction Act of 1984, as amended.

GAO developed a financial model to analyze the financial
incentives under these laws. GAO also interviewed offi-
cials of HUD, housing investment firms, and housing
interest groups on the impact of the 1984 tax legislation on
federally assisted resyndication investment.


GAO found that these resyndications became more
attractive to investors in and sellers of federally assisted
rental property following the Economic Recovery Tax Act
of 1981, which provided greater opportunities for tax
incentives related to the resyndications. GAO also found
that tax provisions of the 1984 act limited some of the
financial incentives available to resyndication investors
and sellers.






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GAO/ RCED-85-112
JULY 10, 1985

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