Credit for Developing Our Communities
The federal low-income housing tax credit program acts as an incentive for property owners to invest in the development of rental housing for individuals and families with fixed or limited incomes.
The housing tax credit provides a dollar-for-dollar reduction (or credit) to offset an owner’s federal tax liability on ordinary income for a 10-year period.
This tax credit often provides the last critical element to ensure the financial feasibility of the project.
These affordable housing developments often attract young professionals, working families, seniors or persons with disabilities who are unable to maintain a house but want to live independently.
9% Housing Tax Credit Program
Determination of Credit Amount: The amount of the credit is limited to no more than the amount necessary for the financial feasibility of the project. The credit amount is determined as a percentage of the “qualified” cost of development. The maximum percentage for new construction and rehabilitation is 9%. The maximum percentage for acquisition and federally subsidized projects is approximately 4%.
Eligibility
- Must be a residential rental property.
- Be new construction, substantial rehabilitation or acquisition and rehabilitation project
Must meet one of the following requirements:
- 20% or more of the units in the project will be occupied by individuals or families whose income is 50% or less than the area median gross income (AMI) and the unit is rent-restricted.
- 40% or more of the units in the project will be occupied by individuals or families whose income is 60% or less than the area median gross income (AMI) and the unit is rent-restricted.
- 40% or more of the units in the project will be occupied by individuals or families whose income is 80% or less than the area median gross income (AMI) and the units are rent-restricted, as long as the average income/rent limit in the project is 60% or less AMI.
Applicants
- Individuals
- Nonprofit or for-profit organizations
- Partnerships
- Limited Liability Companies
Application Facts
- The 9% housing tax credit program is a highly competitive process, and applications may be submitted annually.
- Potential applicants are encouraged to familiarize themselves with all requirements, including previous experience and training.
- Full requirements are available in the Qualified Allocation Plan for that year.
- Create & Submit an Online Application
4% Housing Tax Credit Program
- Application Procedures: The application requirements are detailed in the 4% Qualified Allocation Plan. Applications are accepted on an ongoing basis.
- Reservation Procedures: An administrative review is conducted on each application. The application must pass threshold requirements for the Housing Tax Credit Program. A non-refundable reservation fee is assessed at 1% of the total 10-year tax credit amount.
- Determination of Credit Amount: The amount of credit is limited to no more than the amount necessary for the financial feasibility of the project. The credit is determined by taking a percentage of the “qualified” costs of the development.
Compliance
IFA monitors all Low-Income Housing Tax Credit, HOME program and National Housing Trust Fund projects for compliance throughout the designated compliance period.
Resources
Browse documents, download forms, and gather more information about the LITHC Program, Historical Annual Awards, and other related programs on the Resources Page.
Reporting
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