(a)

1. (1) A unit must be suitable for occupancy in accordance with state or local codes in order for credits to be claimed.
2. (2) If the unit is not habitable, no credits can be claimed.

(b)

1. (1) The Internal Revenue Service has ruled that if a unit is destroyed due to a casualty loss (i.e., fire, flood, or other disaster), credits cannot be claimed while the unit is being replaced.
2. (2) Owners must report a casualty loss to the Arkansas Development Finance Authority within thirty (30) days following the loss.
3. (3) If the building or unit is restored within a reasonable time, credits can again be claimed and no recapture would occur.

(c) What is a reasonable replacement time.

1. (1) The reasonableness of the time period to repair damaged property depends on the extent of the damage.

2. (2) The authority will consider other factors such as the:

   1. (A) Location of the property; and
   2. (B) Time of the year.

3. (3)

   1. (A) Generally, however, two (2) years should be sufficient for the replacement of property completely destroyed by a casualty loss.
   2. (B) In the event the owner is not able to replace the property within two (2) years, the authority may extend the time period if the owner demonstrates that there is a reasonable cause for delay.