LOW-INCOME HOUSING TAX CREDIT SHOWCASE

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Low-Income Housing Tax Credit Showcase The Nation’s Need for Affordable Rental Housing An unprecedented 11 million renter households— more than one in four of all renters in the U.S.—spend more than half of their monthly income on rent. This number includes those whose incomes are above LIHTC eligibility. 11 million renter households spend more than half of their monthly income on rent. nter ds half e on rent. xtremely families ilies need ilies le housing r extremely ome renters ly low-income need le housing The number of cost-burdened renters set a new high in 2013. Approximately 20.8 million households, 3.3M affordable housing units for extremely just under half of all renter households, pay more than 11 million renter low-income renters Nearly 13% 50 percent of income for housing. households Nearly 13% of nation’s supply of 11 spend million more than half renter low-income Nearly housing 13% of nation’s supply of lost Nationally, the gap between the number of of their households of monthly income on rent. since nation’s 2001 supply of low-income housing lost available affordable rental homes and extremely lowincome households that need of their them monthly is more income than on 8.2 rent. 11.5M extremely families spend more than half low-income housing lost since 2001 since 2001 million homes. 3.3M affordable housing units for extremely 8.2M extremely low-income families need Since 2001, nearly 13 percent of the nation’s low-income renters affordable housing On average, supply of low-income housing has been 3.3M affordable housing On units average, for extremely applications permanently lost from the stock of available low-income renters 11.5M extremely low-income received On annually families average, applications is affordable rental housing due to conversion to more applications 11.5M extremely received low-income annually families is than market-rate rentals or condominiums, demolition or 3.3M received affordable annually housing is more than twice obsolescence. units for extremely 11.5M more the available than extremely low-income twice families LIHTC low-income renters 8.2M twice extremely low-income the available authority families need In 2012, there were 11.5 million extremely affordable housing 8.2M extremely the available LIHTC authority low-income low-income families but only 3.3 million LIHTC housing families authority 8.2M extremely low-income families need need units that were both available and affordable housing at that affordable housing 11.5M extremely low-income families income level. On average, 11.5M extremely 3.3M low-income affordable On average, families housing applications State allocating agencies, on average, receive units for extremely received On annually average, applications is applications annually for more than twice as much 3.3M low-income affordable renters housing more applications received annually is than units for extremely LIHTC authority as they have available. received annually is 8.2M more extremely low-income twice low-income thanrenters families need more the available than To address these unmet needs, the Housing 8.2M twice affordable extremely housing low-income LIHTC twice the available authority Commission of the Bipartisan Policy Center families need the available LIHTC authority affordable housing recently recommended that annual LIHTC LIHTC authority authority be increased by 50 percent. 6 Novogradac & Company LLP
Residents’ Incomes and Eligibility Under Internal Revenue Code Section 42, at least 20 percent of the units of a LIHTC property must be rented to low-income households. The number of units that must be rented to low-income households and the income limits for those tenants are defined within the minimum set asides: 20/50 or 40/60. • 20/50 minimum set aside: A LIHTC property must rent at least 20 percent of its total residential units to low-income households who earn less than 50 percent of the area median gross income (AMGI) for that household size. 2014 Median Income Increase $63,900 $65,800 2015 each year the income limits that determine which households are eligible to rent an LIHTC unit. • 40/60 minimum set aside: A LIHTC property must rent at least 40 percent of its total residential units to low-income households who earn less than 60 percent of the AMGI for that household size. A LIHTC partnership elects which minimum setaside it will submit to the Internal Revenue Service. Tax credit recapture is normally assessed against accelerated credits proportionate to the number of rental housing units out of compliance. However, if the percentage of low-income units in a building falls below the minimum set aside of 20 percent or 40 percent, the partnership loses all previously claimed accelerated tax credits for that building. The U.S. Department of Housing and Urban Development (HUD) determines what income amounts are included in a household’s gross income and who qualifies as a household member. HUD also uses median family income (MFI) levels for each metropolitan and nonmetropolitan area to calculate The estimated national MFI for fiscal year 2015 is $65,800, an increase of about 3 percent from $63,900 in 2014. Median income levels vary widely around the country from a low of $16,900 in Aibonito Municipio, Puerto Rico to a high of $131,100 in Los Alamos County, N.M. Many communities with higher median incomes face shortages of affordable housing. In fact, often because median incomes are higher, these areas can struggle to provide sufficient amounts of workforce housing. One of the LIHTC program’s many benefits is its flexibility; it can be used to develop or preserve affordable housing options in a wide range of markets. The rate at which median incomes increase (or decrease) also differs significantly by market. For example, the median income in LaPorte County, Ind. fell 19.21 percent in 2015, while the median income in Wibaux County, Mont. grew 37.34 percent in 2015. www.novoco.com 7
Page 1 and 2: LOW-INCOME HOUSING TAX CREDIT SHOWC
Page 3 and 4: Novogradac Special Reports low-inco
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Page 9 and 10: About the Low-Income Housing Tax Cr
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About Novogradac & Company About No
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LOW-INCOME HOUSING TAX CREDIT SHOWCASE

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