Housing Tax Credits Eligibility Requirements
Projects eligible for housing tax credits involve construction and/or preservation of decent, safe, sanitary and affordable housing in areas of the greatest housing need. Rent and Income restrictions are placed on the housing units financed with housing tax credits. A minimum of either 20 percent of the total units must be available to tenants whose incomes do not exceed 50 percent of the area median gross income; or 40 percent of the total units must be available to tenants whose incomes do not exceed 60 percent of the area median gross income.
Developments placed in service after August 1, 2018, are allowed to utilize income averaging, allowing units to be rented to tenants whose incomes are 80 percent AMI or less. Gross rents on the low-income units, including tenant-paid utilities, cannot exceed 30 percent of the qualifying monthly median income. In addition, to keep rents affordable, SDHDA requires a minimum of 20 percent of the units to be restricted to the lesser of Fair Market Rent, the actual market rent for the area, or the housing tax credit rent. The project owner must also enter into an agreement to meet the low income occupancy requirements for a minimum of 15 years beyond the initial 15 year compliance period. For information regarding compliance and Year 15 requirements please refer to the Housing Tax Credit Compliance Manual and Y15 Plan.
For more information regarding developments eligible for housing tax credits please refer to the Housing Tax Credit Qualified Allocation Plan.