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What are DDA’s and QCT’s?

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Difficult Development Areas and Qualified Census Tracts A Qualified Census Tract (QCT) is any census tract (or equivalent geographic area defined by the Census Bureau) in which at least 50% of households have an income less than 60% of the Area Median Gross Income (AMGI). HUD has defined 60% of AMGI as 120% of HUD's…

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What is the Illinois Affordable Housing Tax Credit (IAHTC)?

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  The Illinois Affordable Housing Tax Credit (IAHTC) program encourages private investment in affordable housing by providing donors to qualified non-profit affordable housing sponsors with a tax credit on their Illinois state income tax equal to 50% of the donation. Rental and for-sale housing developments are eligible assuming they meet income limits. Many states offer…

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LIHTC Investor Tax Treatment

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Tax planning is an important factor that investors look at when evaluating projects for potential investments. LIHTCs are designed to reduce an investor's tax liability, so investors must be able to project their taxable income over the term of the investment in order to evaluate to what extent they can use LIHTCs to reduce their…

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What is “Recapture”

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A recapture, or taking back, of LIHTCs occurs when a project violates requirements of the program.  Typical recapture occurs when the project fails to meet the minimum set-aside requirements by the end of each taxable year.  This can occur if the project or building fails to meet the requirements in the first, or subsequent, tax…

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Key LIHTC Investment Risks

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The predictability, certainty and timing of the tax credits is the primary focus of underwriting a LIHTC project.  After a project has been approved by the state housing finance agencies, Lihtec will engage third party consultants to provide a detailed examination of the project, market, management and finance factors.  With the general contractor in particular,…

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What is a LIHTC? How does it work?

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Overview Under the Tax Reform Act of 1986, Congress enacted the low-income housing tax credit (LIHTC) to encourage private development of affordable housing.  Through this supply side initiative, the federal government offers tax incentives to bring the private sector into the affordable housing business and to alleviate the federal government's burden of developing affordable housing…

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