Operating funds before closing

ID Status Date Public/Private Industry AHACPA Contact
#16230 Closed public Multifamily Les Sparks
Customer Reply

Hello,

We are auditing a multifamily new construction project under 221(d)(4). Closing has not occurred. We are currently doing the cost certification audit. Lease up began in May 2021. The owners want to use the profit (very successful lease-up) from the operating account to pay closing costs. They state all funds belong to owners before closing.  Is this correct? Can they use operating funds to pay closing costs? If they are correct, can they pay the closing costs directly from the operating account? or should they be transferred to partnership account first?

Thanks,

Les Sparks

This is a slight issue. Remember, all proceeds during the lease-up are used to offset costs during construction. If those costs are part of the cost certification, proceeds will automatically offset those costs., IF the costs not able to be in the cost certification, then those lease-up proceeds will not be available to offset them. SO, review your cost cert data to determine if the specific costs are allowable. That will be the determinant.

 

Let me know if there is anything else.

 

Les Sparks
AHACPA | 459 N 300 W #10 | Kaysville, UT 84037 | Phone: 801-547-0809
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From: AHACPA Support <support@ahacpa.org>
Sent: Monday, December 6, 2021 9:39 AM
To: les@ahacpa.org
Subject: Operating funds before closing

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