NEWEST TAX CREDIT SPECIALIST EXAM
SCRIPT COMPLETE EXAM WITH MOST
TESTED EXAM QUESTIONS AND CORRECT
DETAILED WITH RATIONALES/TAX CREDIT
SPECIALIST EXAM SCRIPT LATEST UPDATED
VERSION 2026 (100% CORRECT VERIFIED
ANSWERS) FULL REVISED EXAM BRAND
NEW!!!
Question 1
Who is responsible for most of the regulatory administration of the Low-Income
Housing Tax Credit Programs?
A. U.S. Department of Housing and Urban Development (HUD)
B. Internal Revenue Service (IRS)
C. State Housing Finance Agencies (SHFA)
D. Local zoning boards
Rationale: While the IRS oversees the LIHTC program at the federal level and
issues regulations, most of the regulatory administration is carried out by State
Housing Finance Agencies (SHFAs). SHFAs allocate tax credits, monitor
,compliance, conduct inspections, and ensure that properties meet program
requirements throughout the compliance period.
Question 2
The initial Compliance Period for LIHTC properties combined with the Extended
Use Period must be for a minimum period of affordability at:
A. 15 years
B. 30 years
C. 45 years
D. 99 years
Rationale: LIHTC properties must remain affordable for a minimum of 30 years
when combining the initial 15-year Compliance Period with the Extended Use
Period. This ensures long-term affordability for low-income households.
Question 3
Which section of the Internal Revenue Code establishes the Low-Income Housing
Tax Credit (LIHTC) program?
A. Section 45
B. Section 42
C. Section 48
D. Section 121
Rationale: The LIHTC program is governed by Section 42 of the Internal Revenue
Code, created as part of the Tax Reform Act of 1986. It provides a dollar-for-dollar
reduction in federal tax liability for developers who build or rehabilitate affordable
rental housing.
,Question 4
The LIHTC regulations require that HUD guidance for properly identifying and
calculating income and assets be followed according to:
A. HUD Handbook 4350.1
B. HUD Handbook 4350.3 REV-1
C. HUD Handbook 4225.2
D. HUD Handbook 7460.8
Rationale: HUD Handbook 4350.3 REV-1 provides the guidance for properly
identifying and calculating income and assets for LIHTC properties. This
handbook is the authoritative source for income verification procedures.
Question 5
The two types of LIHTC credits are:
A. 4% and 9% credits
B. 3% and 7% credits
C. 5% and 10% credits
D. 6% and 12% credits
Rationale: The LIHTC program offers two types of credits: 4% credits (typically
for acquisition or rehabilitation without tax-exempt bonds) and 9% credits (for
new construction or substantial rehabilitation). The credit percentage is
determined by the applicable federal rate and the project's characteristics.
Question 6
What is the minimum set-aside election for LIHTC properties?
A. 20-50 option (20% of units at 50% AMI)
B. 40-60 option (40% of units at 60% AMI)
C. Average income option (average at or below 60% AMI)
D. All of the above
, Rationale: The Minimum Set-Aside election for LIHTC properties now consists of
three options: the 20-50 option, the 40-60 option, and the Average Income option.
Owners must elect one of these options on Form 8609.
Question 7
In determining a building's applicable fraction, its unit percentage and its square
footage percentage:
A. Are added together
B. Are multiplied together
C. Should be compared to see which is smaller
D. Should be compared to see which is larger
Rationale: In determining a building's applicable fraction, its unit percentage and
its square footage percentage should be compared to see which is smaller. The
applicable fraction is the lesser of these two percentages.
Question 8
What is the required minimum lease term for LIHTC tenancy?
A. 6 months
B. 12 months
C. 24 months
D. Month-to-month at owner's discretion
Rationale: Leases for LIHTC tenancy must be for a minimum of 6 months. This
ensures stability for tenants while allowing for appropriate property management.
Question 9
Rent limits for LIHTC represent Gross Rent, which consists of:
A. Contract rent only
B. Contract rent plus utility allowances
C. Contract rent plus utility allowances plus non-optional fees
SCRIPT COMPLETE EXAM WITH MOST
TESTED EXAM QUESTIONS AND CORRECT
DETAILED WITH RATIONALES/TAX CREDIT
SPECIALIST EXAM SCRIPT LATEST UPDATED
VERSION 2026 (100% CORRECT VERIFIED
ANSWERS) FULL REVISED EXAM BRAND
NEW!!!
Question 1
Who is responsible for most of the regulatory administration of the Low-Income
Housing Tax Credit Programs?
A. U.S. Department of Housing and Urban Development (HUD)
B. Internal Revenue Service (IRS)
C. State Housing Finance Agencies (SHFA)
D. Local zoning boards
Rationale: While the IRS oversees the LIHTC program at the federal level and
issues regulations, most of the regulatory administration is carried out by State
Housing Finance Agencies (SHFAs). SHFAs allocate tax credits, monitor
,compliance, conduct inspections, and ensure that properties meet program
requirements throughout the compliance period.
Question 2
The initial Compliance Period for LIHTC properties combined with the Extended
Use Period must be for a minimum period of affordability at:
A. 15 years
B. 30 years
C. 45 years
D. 99 years
Rationale: LIHTC properties must remain affordable for a minimum of 30 years
when combining the initial 15-year Compliance Period with the Extended Use
Period. This ensures long-term affordability for low-income households.
Question 3
Which section of the Internal Revenue Code establishes the Low-Income Housing
Tax Credit (LIHTC) program?
A. Section 45
B. Section 42
C. Section 48
D. Section 121
Rationale: The LIHTC program is governed by Section 42 of the Internal Revenue
Code, created as part of the Tax Reform Act of 1986. It provides a dollar-for-dollar
reduction in federal tax liability for developers who build or rehabilitate affordable
rental housing.
,Question 4
The LIHTC regulations require that HUD guidance for properly identifying and
calculating income and assets be followed according to:
A. HUD Handbook 4350.1
B. HUD Handbook 4350.3 REV-1
C. HUD Handbook 4225.2
D. HUD Handbook 7460.8
Rationale: HUD Handbook 4350.3 REV-1 provides the guidance for properly
identifying and calculating income and assets for LIHTC properties. This
handbook is the authoritative source for income verification procedures.
Question 5
The two types of LIHTC credits are:
A. 4% and 9% credits
B. 3% and 7% credits
C. 5% and 10% credits
D. 6% and 12% credits
Rationale: The LIHTC program offers two types of credits: 4% credits (typically
for acquisition or rehabilitation without tax-exempt bonds) and 9% credits (for
new construction or substantial rehabilitation). The credit percentage is
determined by the applicable federal rate and the project's characteristics.
Question 6
What is the minimum set-aside election for LIHTC properties?
A. 20-50 option (20% of units at 50% AMI)
B. 40-60 option (40% of units at 60% AMI)
C. Average income option (average at or below 60% AMI)
D. All of the above
, Rationale: The Minimum Set-Aside election for LIHTC properties now consists of
three options: the 20-50 option, the 40-60 option, and the Average Income option.
Owners must elect one of these options on Form 8609.
Question 7
In determining a building's applicable fraction, its unit percentage and its square
footage percentage:
A. Are added together
B. Are multiplied together
C. Should be compared to see which is smaller
D. Should be compared to see which is larger
Rationale: In determining a building's applicable fraction, its unit percentage and
its square footage percentage should be compared to see which is smaller. The
applicable fraction is the lesser of these two percentages.
Question 8
What is the required minimum lease term for LIHTC tenancy?
A. 6 months
B. 12 months
C. 24 months
D. Month-to-month at owner's discretion
Rationale: Leases for LIHTC tenancy must be for a minimum of 6 months. This
ensures stability for tenants while allowing for appropriate property management.
Question 9
Rent limits for LIHTC represent Gross Rent, which consists of:
A. Contract rent only
B. Contract rent plus utility allowances
C. Contract rent plus utility allowances plus non-optional fees
