TOPA Exemptions for Affordable and LIHTC Buildings Under the RENTAL Act

Owners and developers of affordable and Low-Income Housing Tax Credit (LIHTC) properties spent years navigating TOPA around routine capital events. The RENTAL Amendment Act of 2025 carved out several of those events explicitly. If you operate affordable or voucher-heavy buildings, these exemptions matter. (General information, not legal or tax advice.)

Bringing in — or exiting — a minority investor

The reorganized § 402b excludes from "sale" the transfer of ownership interests whose sole purpose is to admit one or more limited partners or investor members who will hold a minority interest, or to allow the exit of one or more partners/members — provided the new investor makes a capital contribution proportionate to the interest acquired and doesn't acquire additional interest within 12 months, and provided the exemption is tied to 26 U.S.C. § 42 tax benefits or the entity remains under the same control before and after. A Notice of Transfer is required.

Translation: a typical LIHTC investor admission or exit — the kind of move that recurs across a deal's life cycle — no longer triggers a TOPA offer of sale.

Credit-period and continued-affordability transfers

The Act also excludes certain transfers where the LIHTC credit period has ended and the property remains subject to an extended low-income housing commitment (as defined in 26 U.S.C. § 42(h)(6)(B)) or a comparable federal/District restrictive covenant at least as restrictive, the same owner controls before and after, and the property stays subject to a 10-year-or-longer affordability commitment following the transfer. Again, a Notice of Transfer is required.

And transfers whose sole purpose is to qualify for and enter a new credit period — with the same control before and after — are likewise excluded, with notice.

Why the District did this

TOPA's purpose is to give tenants a shot at buying when a building genuinely changes hands to a new owner. Routine LIHTC capital events — syndicating credits, swapping investors, re-syndicating for a new credit period — aren't that. They're financing mechanics that keep affordable buildings affordable. Forcing a full TOPA process on each one added cost and delay to exactly the housing DC wants to preserve. The exemptions align TOPA with that reality.

The conditions still bite

Don't over-read these as blanket exemptions:

• Almost all of them require a Notice of Transfer to tenants and the District (§ 403a).
• The burden of proving the exemption is on the owner (§ 402b(c)).
• The affordability and control conditions are specific — a transfer that breaks continued affordability or brings in a new controlling owner can fall right back into TOPA.
• The LIHTC-related definitions interact with the Act's separate Title IV changes to the DC Low-Income Housing Tax Credit program; coordinate with tax counsel.

What it means for voucher landlords

Many voucher-heavy and mixed-income buildings are financed with LIHTC. These exemptions make it materially easier to recapitalize and preserve that housing without a TOPA detour every time an investor moves — which supports the supply of quality units that work with the HCV program. If your building layers vouchers on top of LIHTC, map both the TOPA exemptions and the Title IV credit changes with counsel before any transaction.

Next steps

Affordable-housing transfers are the deepest end of the TOPA pool. Confirm the specific exemption, prepare the Notice of Transfer, and get counsel — then see the general sale sequence in Selling a DC rental under the new TOPA rules and the full exemption map in What triggers tenant purchase rights. Operating an affordable building and want the voucher side run by specialists? See Affordable buildings.