LIHTC EXAM QUESTIONS AND ANSWERS.
Low Income Housing Tax Credit Answer - Also known as LIHTC. Governed by Section 42 of the IRC(Part of the Tax Reform Act of 1986.). Subsidizes the development cost of affordable rental housing. Provides investors with dollar-for-dollar reduction of federal taxes in return for investment in affordable housing.
IRC Answer - International Residential Code was created to serve as a complete, comprehensive code regulating the construction of single-family houses, two-family houses (duplexes) and buildings consisting of three or more townhouse units.
HFA Answer - Housing Finance Agency. State or local agencies responsible for financing and preserving low/mod housing within a state.
May impose stricter requirements than the Code (permitted by Treasury Regulation).
Two primary roles of the HFA Answer - 1. Allocation of Credits
2. Monitor for Compliance
Allocation of Credits Answer - Competitive, based on QAP.
Preservation of existing properties is a significant trend.
Credits are limited- normally based on the population of a State.
QAP Answer - Qualified Allocation Plan details the selection criteria and application requirements for Housing Credits and tax-exempt bonds.
Monitor for Compliance Answer - File review and physical inspection. The number of files/units reviewed depends on the size of the property. Lesser of 20% of units or the number of units shown on an IRS chart (1 to 27).
First HFA review must occur by end of second year after last building is placed in service.
After the initial review, reviews must be conducted at least once every three years.
No more than a 15-day notice will be given prior to review.
In the event of non-compliance, the HFA must... Answer - give the Owner a chance to correct.
Up to 90 days (most states give less time)
Low Income Housing Tax Credit Answer - Also known as LIHTC. Governed by Section 42 of the IRC(Part of the Tax Reform Act of 1986.). Subsidizes the development cost of affordable rental housing. Provides investors with dollar-for-dollar reduction of federal taxes in return for investment in affordable housing.
IRC Answer - International Residential Code was created to serve as a complete, comprehensive code regulating the construction of single-family houses, two-family houses (duplexes) and buildings consisting of three or more townhouse units.
HFA Answer - Housing Finance Agency. State or local agencies responsible for financing and preserving low/mod housing within a state.
May impose stricter requirements than the Code (permitted by Treasury Regulation).
Two primary roles of the HFA Answer - 1. Allocation of Credits
2. Monitor for Compliance
Allocation of Credits Answer - Competitive, based on QAP.
Preservation of existing properties is a significant trend.
Credits are limited- normally based on the population of a State.
QAP Answer - Qualified Allocation Plan details the selection criteria and application requirements for Housing Credits and tax-exempt bonds.
Monitor for Compliance Answer - File review and physical inspection. The number of files/units reviewed depends on the size of the property. Lesser of 20% of units or the number of units shown on an IRS chart (1 to 27).
First HFA review must occur by end of second year after last building is placed in service.
After the initial review, reviews must be conducted at least once every three years.
No more than a 15-day notice will be given prior to review.
In the event of non-compliance, the HFA must... Answer - give the Owner a chance to correct.
Up to 90 days (most states give less time)
