HCCP Study Guide Questions with Verified
Correct Answers
Tax credit
A dollar for dollar credit against a tax liability
Who enacted the low income housing tax credit program?
Congress did as part of the tax reform act of 1986
What does the low income housing tax credit program operate under?
Under Section 42 of the Internal revenue code
Who is responsible for all LIHTC rules
IRS
Who has the power to deny or recapture tax credits
IRS
What is an HFA
State housing finance agency
Who monitors compliance?
HFA OR DCA (state)
Who is responsible for the allocation of tax credits
DCA or state
Who buys the tax credit
Syndicator
, Project set aside
Minimum number of units in the project that must be set aside as low income
Where do you choose your project set aside
One time election made in form 8609 and is irrevocable
What are the three choices of set asides?
20/50, 40/60, average income test
Explain 20/50 set aside
At least 20% of the total units must be occupied by households whose incomes and rents are
50% or less of the AMI (area median income)
Explain 40/60 set aside
At least 40% of the total units must be occupied by households whose incomes and rents are
60% or less of the AMI
Explain average income test set aside
Minimum of 40% of a projects units must be both rent restricted and occupied by individual
whose incomes do not exceed the imputed income limitation designated by the taxpayer ( avg
cannot exceed 60% of the imputed income limitations)
What happens if you do not satisfy the set minimum set asides in the first year of the
credit period?
Permanent loss of the tax credit
How do you get 60% income limit from 50% amount
Times by 1.2
Correct Answers
Tax credit
A dollar for dollar credit against a tax liability
Who enacted the low income housing tax credit program?
Congress did as part of the tax reform act of 1986
What does the low income housing tax credit program operate under?
Under Section 42 of the Internal revenue code
Who is responsible for all LIHTC rules
IRS
Who has the power to deny or recapture tax credits
IRS
What is an HFA
State housing finance agency
Who monitors compliance?
HFA OR DCA (state)
Who is responsible for the allocation of tax credits
DCA or state
Who buys the tax credit
Syndicator
, Project set aside
Minimum number of units in the project that must be set aside as low income
Where do you choose your project set aside
One time election made in form 8609 and is irrevocable
What are the three choices of set asides?
20/50, 40/60, average income test
Explain 20/50 set aside
At least 20% of the total units must be occupied by households whose incomes and rents are
50% or less of the AMI (area median income)
Explain 40/60 set aside
At least 40% of the total units must be occupied by households whose incomes and rents are
60% or less of the AMI
Explain average income test set aside
Minimum of 40% of a projects units must be both rent restricted and occupied by individual
whose incomes do not exceed the imputed income limitation designated by the taxpayer ( avg
cannot exceed 60% of the imputed income limitations)
What happens if you do not satisfy the set minimum set asides in the first year of the
credit period?
Permanent loss of the tax credit
How do you get 60% income limit from 50% amount
Times by 1.2
