SERVICE CORRECTS AVERAGE AREA PURCHASE PRICE SAFE HARBOR LIMITATIONS FOR IOWA RESIDENCES.

Rev. Proc. 88-30

SECTION 1. PURPOSE

This revenue procedure modifies the average area purchase price safe harbor limitations for new and existing single-family residences for the State of Iowa as published in Rev. Proc. 87-20, 1987-19 I.R.B. 9.

SEC. 2. BACKGROUND

Issuers of qualified mortgage bonds, as defined in section 143(a) of the Internal Revenue Code, and issuers of mortgage credit certificates, as defined in section 25(c), must satisfy several requirements contained in section 143. One of the requirements is that the cost of each residence must not exceed a certain percentage of the average area purchase price applicable to such residence. Section 143(e). Issuers of qualified mortgage bonds and mortgage credit certificates may rely on the average area purchase price safe harbor limitations contained in Rev. Proc. 87-20 for purposes of satisfying the purchase price requirement. However, the average area purchase price safe harbor limitations published in Rev. Proc. 87-20 for Iowa have been determined to be incorrect. Therefore, corrected safe harbor limitations are set forth in section 3 of this revenue procedure.

SEC. 3. APPLICATION

Section 3.04 of Rev. Proc. 87-20 is modified by deleting the average area purchase price safe harbor limitations for "all areas" in the State of Iowa of $54,700 for new single-family residences and $64,600 for existing single-family residences and substituting $81,800 for new single-family residences and $58,500 for existing single-family residences.

SEC. 4. EFFECTIVE DATE

01 Subject to subsections .02 and .03, the modifications made by this revenue procedure are effective as if they were contained in Rev. Proc. 87-20.

02 Pursuant to the authority contained in section 7805(b) of the Code, the corrected average area purchase price safe harbor limitation for existing single-family residences for Iowa set forth in this revenue procedure does not apply to qualified mortgage bonds sold before July 13, 1988, 30 days after publication of this revenue procedure in the Internal Revenue Bulletin, if commitments to provide financing for the mortgages are made before September 11, 1988, 90 days after publication of this revenue procedure in the Internal Revenue Bulletin.

03 Pursuant to the authority contained in section 7805(b) of the Code, the corrected average area purchase price safe harbor limitation for existing single-family residences for Iowa set forth in this revenue procedure does not apply if mortgage credit certificates are issued with respect to bond authority exchanged before the earlier of (1) July 13, 1988, 30 days after publication of this revenue procedure in the Internal Revenue Bulletin, or (2) the date following the termination date set forth in section 25(h), and if the commitments to issue the certificates are made before September 11, 1988, 90 days after the publication of this revenue procedure in the Internal Revenue Bulletin.

SEC. 5. EFFECT ON OTHER REVENUE PROCEDURES

Rev. Proc. 87-20 is modified.

DRAFTING INFORMATION

The principal author of this revenue procedure is Gene Overton of the Individual Tax Division. For further information regarding this revenue procedure contact Mr. Overton on (202) 566-3650 (not a toll-free call).