Schedule F of Form 1023 applies to organizations that provide low-income housing. To qualify for tax-exempt status, the organization must demonstrate that it will provide affordable housing for a significant segment of individuals in the community with low incomes.
Low-income housing programs may serve multiple charitable purposes, including housing for poor, frail, or elderly individuals.
Low-income housing is not the same as transitional housing. Programs designed primarily for short-term stays, rehabilitation, or temporary support generally fall outside low-income housing analysis and are evaluated under different standards.
IRS Form 1023 Schedule F Table of Contents
- IRS Form 1023 Schedule F: Description of Housing Facilities
- IRS Form 1023 Schedule F: Income Qualification and Resident Selection
- IRS Form 1023 Schedule F: Safe Harbor Compliance Under Revenue Procedure 96-32
- IRS Form 1023 Schedule F: Housing Affordability
- IRS Form 1023 Schedule F: Long-Term Affordability Restrictions
- IRS Form 1023 Schedule F: Fees, Charges, and Maintenance Costs
- IRS Form 1023 Schedule F: Social Services Provided to Residents
- IRS Form 1023 Schedule F: Participation in Government Housing Programs
IRS Form 1023 Schedule F: Description of Housing Facilities
Each housing facility must be described in detail. This includes the type of facility, such as an apartment complex, condominium, cooperative, private residence, or similar structure.
The description should explain whether the organization owns or leases the facility, the number of units or rooms, how many residents the facility can accommodate, and the current number of residents. It should also state whether residents rent or purchase housing from the organization.
Vague or minimal descriptions invite follow-up questions. The IRS expects a clear operational picture of the housing being provided.
IRS Form 1023 Schedule F: Income Qualification and Resident Selection
The organization must describe who qualifies for housing based on income levels or other eligibility criteria and explain how residents are selected.
This includes how income limits are defined, how eligibility is verified, and whether selection is based on need, waiting lists, lotteries, referrals, or other criteria. The process must demonstrate that housing is directed to low-income individuals rather than preselected or favored applicants.
IRS Form 1023 Schedule F: Safe Harbor Compliance Under Revenue Procedure 96-32
The IRS evaluates low-income housing programs using the safe harbor guidelines in Revenue Procedure 96-32.
Under these guidelines, housing will be treated as charitable if, for each project:
- At least 75 percent of the units are occupied by residents who qualify as low-income; and
- Either:
- At least 20 percent of the units are occupied by residents who also meet the very low-income limit for the area, or
- At least 40 percent of the units are occupied by residents whose income does not exceed 120 percent of the area's very low-income limit; and
- Less than 25 percent of the units are provided at market rates to individuals whose income exceeds the low-income limit.
The organization must explain whether and how its housing projects meet these thresholds.
IRS Form 1023 Schedule F: Housing Affordability
The organization must explain how its housing is affordable to low-income residents.
This includes how rent or purchase prices are set, how affordability is measured relative to income, and whether subsidies, sliding scales, or below-market pricing are used. Simply asserting that housing is affordable is not sufficient; the IRS expects an explanation of the mechanism.
IRS Form 1023 Schedule F: Long-Term Affordability Restrictions
The organization must disclose whether it imposes restrictions to ensure that housing remains affordable to low-income residents over time.
Restrictions may include deed restrictions, regulatory agreements, resale controls, rent caps, or contractual obligations tied to funding sources. If such restrictions exist, they should be described clearly.
IRS Form 1023 Schedule F: Fees, Charges, and Maintenance Costs
In addition to rent or mortgage payments, the organization must disclose whether residents pay periodic fees or maintenance charges.
If fees are charged, the organization must describe what the charges cover and how they are determined. The IRS reviews these charges to ensure they do not undermine affordability or function as hidden rent increases.
IRS Form 1023 Schedule F: Social Services Provided to Residents
The organization must disclose whether it provides social services to residents.
If social services are offered, such as case management, health services, counseling, or support programs, they should be described. While social services can support charitable purposes, they do not substitute for meeting low-income housing requirements.
IRS Form 1023 Schedule F: Participation in Government Housing Programs
The organization must disclose whether it participates in federal, state, or local government housing programs.
This includes programs administered by the U.S. Department of Housing and Urban Development (HUD) or similar agencies. Participation should be described in detail, including the nature of the program and the organization's role.
Single-sentence answers are insufficient. Government program participation is often used by the IRS as corroborating evidence of affordability and compliance.