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Low-Income Housing Credit

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					             Gulf
          Opportunity
          Zone Act of
             2005


Low-Income
Housing Credit
        General Rules

  A general business credit is allowed for a
   percentage of the basis of qualified low-income
   buildings newly constructed or substantially
   rehabilitated
http://www.gismaps.fema.gov/2005graphics/dr1604/dec_1604.pdf
 The low-income housing credit is claimed over a
   10-year period
 It applies to property occupied by tenants
   having incomes below specified levels
 The credit percentage depends on whether or
   not the project is Federally subsidized.
        Income Target Tests

   A qualified low-income housing project
    must meet one of the following two tests:
    ◘ 20-50 test---20% or more of the units are both
http://www.gismaps.fema.gov/2005graphics/dr1604/dec_1604.pdf
      rent restricted and occupied by individuals with
      income is 50% or less of area median gross
      income.
    ◘ 40-60 test---40% or more of units are both
      rent restricted and occupied by individuals with
      income is 60% or less of area median gross
      income.
        Special Income Targeting
        Rules GO Zone Property

  The area median gross income for the GO
   Zone is determined by state
 Special income targeting rules for GO
http://www.gismaps.fema.gov/2005graphics/dr1604/dec_1604.pdf

   Zone property placed in service in 2006,
   2007, and 2008 in a non-metropolitan
   area of the GO Zone
    ◘ A national median gross income standard is
      used instead of area median gross income.
        State Housing Credit Ceiling
        General Rules

  The State of Mississippi housing credit
   agency determines the aggregate State
   housing credit ceiling
http://www.gismaps.fema.gov/2005graphics/dr1604/dec_1604.pdf

 The State ceiling does not apply to
   projects that also receive financing with
   proceeds from tax-exempt bonds that are
   subject to the private activity bond limit
        State Housing Credit Ceiling
        GO Zone Rules

  The otherwise State housing credit ceiling
   amount is increased for Mississippi
 The increase applies to 2006, 2007, and
http://www.gismaps.fema.gov/2005graphics/dr1604/dec_1604.pdf

   2008
 The additional credit cap equal $18.00
   times the number of Mississippi residents
   in the GO Zone
        Credit Percentage
        General Rules

  Applicable credit percentage is prescribed
   by the Secretary of Treasury on a monthly
   basis to yield over a 10-year period
http://www.gismaps.fema.gov/2005graphics/dr1604/dec_1604.pdf
   amounts of credit which have a present
   value equal to:
    ◘ 70% of the qualified basis not Federally
      subsidized, and
    ◘ 30% of the qualified basis that is Federally
      subsidized
        Credit Percentage
        Enhance Percentage for GO
        Zone
  General rule: buildings located in high cost areas
   are eligible for an enhanced credit
 An enhanced credit increases the 70% of basis
http://www.gismaps.fema.gov/2005graphics/dr1604/dec_1604.pdf
   to 91% and the 30% of basis to 39%
 The mechanism for the increase is an increase
   from 100% to 130% of otherwise applicable
   eligible basis
 Under the general rule, no more than 20 percent
   of population may be a difficult to develop area
        GO Zone Enhanced Credit

  The Gulf Opportunity Zone is treated as
   high-cost areas for property placed in
   service in 2006, 2007, 2008
http://www.gismaps.fema.gov/2005graphics/dr1604/dec_1604.pdf

 Thus, newly constructed or substantially
   rehabilitated housing in the GO Zone is
   eligible for the enhanced credit
 The 20% restriction for difficult to develop
   area is waived

				
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