LIHTC Self Study questions with answers

LIHTC Self Study questions with answers |\ |\ |\ |\ |\




Housing tax credit for a year = [_________] ? - CORRECT
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ANSWERS ✔✔"applicable percentage" of "qualified basis"
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of each "qualified low-income building"
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Qualified basis = [_______] - CORRECT ANSWERS
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✔✔"applicable fraction" of "eligible basis" |\ |\ |\ |\




I.e. the portion of the eligible basis attributable to low-
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income units = qualified basis |\ |\ |\ |\




Eligible basis includes [__] and excludes [__] and reduced
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by [__] - CORRECT ANSWERS ✔✔Includes:
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1. cost acquiring
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2. cost of rehabilitating
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3. cost of constructing building(s)
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AKA - if it's depreciable, it's includable in EB
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Excludes:
1. cost of land
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Reduced by: |\

,1. amount of federal grants financing construction/rehab
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costs


What is a qualified low-income building? - CORRECT
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ANSWERS ✔✔Any building which is part of a "qualified |\ |\ |\ |\ |\ |\ |\ |\ |\



low-income housing project" at all times during the |\ |\ |\ |\ |\ |\ |\



"compliance period."
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When does the compliance period for a qualified low-
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income housing project begin and end? - CORRECT
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ANSWERS ✔✔Begins: first taxable year of the 10 year |\ |\ |\ |\ |\ |\ |\ |\ |\



credit period |\




Ends: 15 taxable years later
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Must qualify as a low-income housing project continuously
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for that 15 year period
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What are the 2 things that a project must be in order to
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qualify as a "low-income housing project"? - CORRECT
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ANSWERS ✔✔1. rent restricted and |\ |\ |\ |\




2. satisfy one of the minimum set-aside tests of 42g
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What are the 3 minimum set-aside tests? - CORRECT
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ANSWERS ✔✔1. 20-50 test: At least 20% of the residential |\ |\ |\ |\ |\ |\ |\ |\ |\

,units in the project must be both rent-restricted and
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occupied by tenants whose GI is 50% or less of the area |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\



median gross income (AMGI) |\ |\ |\




2. 40-60 test: At least 40% of the residential units in the
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project must be both rent-restricted and occupied by
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tenants whose GI is 60% or less of AMGI |\ |\ |\ |\ |\ |\ |\ |\




3. Average Income Test: 40% or more (25% if project
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located in certain high cost housing areas) of the
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residential units in the project are rent-restricted and |\ |\ |\ |\ |\ |\ |\ |\



occupied by tenants whose income does not exceed the |\ |\ |\ |\ |\ |\ |\ |\ |\



imputed income limitation designated by the taxpayer
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with respect to the respective unit
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What is required of the imputed income limitations of the
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average income test? - CORRECT ANSWERS ✔✔Under the |\ |\ |\ |\ |\ |\ |\ |\



average income test, the TP must designate the imputed
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income limitation for each unit and that imputed income
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limitation must be 20, 30, 40, 50, 60, 70, or 80% of AMGI |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\



with the average of the imputed income limitations for
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each unit must not exceed 60% of AMGI.
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NOTE: this essentially gets you to the same result as the
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40-60 test, but with more flexibility for AMGI percentages
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per unit |\

, What happens if the income of the occupant of a low-
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income unit rises above the applicable income limitation?
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- CORRECT ANSWERS ✔✔Generally, the unit will continue
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to be treated as a low-income unit if the income of the
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occupant initially satisfied the income limitation and the
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unit continues to be rent restricted.
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What happens if the income of the occupant of a low-
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income unit rises above the applicable income limitation
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as designated by the TP under 20-50 or the 40-60 test? -
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CORRECT ANSWERS ✔✔The Applicable Income Limitation |\ |\ |\ |\ |\ |\



applies:


The unit will continue to be treated as a low-income unit if
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the income of the occupants of a low-income unit
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increases to not more than 140% of the income limitation |\ |\ |\ |\ |\ |\ |\ |\ |\ |\



applicable to the unit. |\ |\ |\ |\




If the income of the occupants increases above 140% of
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the applicable income limitation, the unit will no longer
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qualify as a low-income unit if any residential rental unit
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of comparable size or smaller in the building is occupied
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by a new resident whose income exceeds the applicable
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income limitation. This is the "next available unit rule".
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What is the rent restriction under the 20-50 test and 40-
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60 test? - CORRECT ANSWERS ✔✔Rent restriction is 30%
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