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.
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%.
Must be a residential rental property.
Be new construction, substantial rehabilitation or acquisition and rehabilitation project
Nonprofit or for-profit organizations
Limited Liability Companies
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.
The application requirements are detailed in the 4% Qualified Allocation Plan. Applications are accepted on an ongoing basis.
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.
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.
IFA monitors all housing tax credit, HOME program and National Housing Tax Credit projects for compliance throughout the designated compliance period.Compliance Information