The Low Income Housing Tax Credits Program (Housing Credits) was introduced as part of the Tax Reform Act of 1986 to promote the development of low-income rental housing through tax incentives. The program offers eligible property owners a ten-year tax credit for each unit created for low-income families. Each state receives allocations based on its population.
Eligible activities include new construction or substantial rehabilitation of at least $20,000 per low-income unit or 20 percent of adjusted basis, whichever is greater. Projects that include acquisition and substantial rehabilitation of existing building(s) that were last placed in service or underwent a substantial rehabilitation no less than ten years prior to acquisition are also eligible for Housing Credits.
Nonprofit and for-profit developers of affordable housing are eligible for Housing Credits. The credit may be obtained in one of two ways:
Housing Credits must be used for one or more rent-restricted units available for long-term, continuous rental use. Generally, at least 20 percent of the units in a project must be rented to tenants earning 50 percent or less of area median income or 40 percent of the units must be rented to tenants earning 60 percent or less of area median. Alternatively, owners may choose to elect the average income option, which allows tenants up to 80 percent of the area median income to reside in the project, provided the average income designations for the overall project are not more than 60 percent of the area median income. Rents charged to tenants cannot exceed 30 percent of the income limit applicable to the unit size, less an allowance for tenant-paid utilities. Only the units rented to low-income persons in a building qualify for Housing Credit.
Buildings with four or fewer units are eligible for Housing Credits only if the project is part of a development plan of action sponsored by a state or local government or a qualified nonprofit organization.
Applicants can apply through the annual competitive round.
For more information,
Housing Corporation |
1231 Louisville Rd.,
KY 40601 502-564-7630;
800-633-8896 (KY only);