Answer

Hello confidential law,

The 4% noncompetitive housing tax credits which you are inquiring about are part of the Low Income Housing Program established by the federal government. The program is administered at the state level with each state getting a fixed allocation of credits based on its population. The state housing agency has wide discretion in determining which projects to award credits, and applications are considered under the state's "Qualified Allocation Plan" (QAP). The credits are usually awarded to projects in a few "allocation rounds" held each year, on a competitive basis. Typically, the top ranked project will get credits, then the second, and so on until the credits are exhausted for the round. A portion of each state's credits must be "set aside" for projects sponsored by non-profit organizations, although non-profits more typically apply for credits under the "general" rules, without regard to the set-aside.

Once you have determined your eligible basis, qualified basis and applicable percentage for a property, you then need to fill out an application with the state in which the property is located. These applications will vary some by state, but they are very lengthy and detailed and often require the assistance of a real estate professional to help complete the application process. I am giving you a link below to a sample application form from the state of Texas.

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http://www.tdhca.state.tx.us/multifamily/docs/08-UniformApp.doc

 

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