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Frequently Asked Questions for Tax Credit - Monitoring
What is the Affordable Housing Tax
Credit Program? The Low-Income Housing Tax Credit program (LIHTC) was created by Congress in 1986 to encourage development of rental housing for households whose income is at or below specified levels. Congress created the program to provide developers of affordable housing with a tax credit that is used to offset a portion of their federal tax liability. In Wisconsin, the program is known as the Affordable Housing Tax Credit Program (AHTC). Tax credit properties must include units for low-income persons. At a minimum, at least 20% of the units must be occupied by households whose income is at or below 50% of the County Median Income (CMI) or at least 40% of the units must be occupied by households whose income is at or below 60% of the CMI. There are also restrictions on the amount of rent that can be charged for a low-income unit. The program is jointly administered by the Internal Revenue Service and state tax credit allocation agencies. The states allocate tax credits to qualifying housing properties based on the agency's Qualified Allocation Plan (QAP) and monitor the properties for compliance with federal requirements concerning household income, rent and habitability. What is County Median Income (CMI)? The County Median Income represents the midpoint of incomes in a given county. If you were to list all of the incomes in a county in sequential order, the median income would be in the middle of the list. The CMI figures are published periodically by the Department of Housing and Urban Development (HUD) and are used in determining whether or not a household qualifies for purposes of the tax credit program. When are the new income limits
coming out? HUD publishes median income information on a periodic basis. Limits remain in effect until HUD officially publishes new limits. Upon receipt of the updated HUD limits, WHEDA publishes the new annual income limits and corresponding rent limits for projects in Wisconsin on this web site. However, it is the owner's responsibility to obtain the limits when HUD updates them. What kind of reports does WHEDA
require and when are they due? Information on WHEDA's monitoring requirements can be found in the AHTC Compliance Manual. The reporting schedule and requirements are also available in AHTC Form 001, Report Submission Instructions and AHTC Form 201, Unit Status Report Instructions. How do I find out the year that
my property first took credit? You need to check the first Form 8609 that was filed for the property with the Internal Revenue Service. You can find the date the building(s) placed in service date on line 7a and the election to begin the credit period on line 10a. When does WHEDA stop monitoring
my development? If your allocation(s) of credit were prior to 1990 and there is not a Land Use Restriction Agreement (LURA) recorded for your property, activity for your property (unit events, physical property, etc.) will be monitored through December 31 of the 15th credit year. Final analysis will be performed after receipt of the last Unit Status Reports. If you received an allocation of credit in 1990 or later, a Land Use Restriction Agreement (LURA) was recorded for your property. The agreement is a restrictive covenant recorded against the property and extends the low-income use of the property beyond the initial 15-year compliance period. Information on WHEDA's monitoring requirements can be found in the Compliance Policy for Extended Use Period. What happens if WHEDA performs
the final analysis of my development (analysis through the end of the
compliance period) and notifies me of potential violations at the end
of my compliance period? As with any potential violation letter from WHEDA, respond to the findings in writing within the 90-day correction period. If a violation existed, the IRS will be notified by WHEDA on Form 8823. A correction date will be included if the item has been corrected. My property was allocated
credit in 1988. I do not have a Land Use Restriction Agreement (LURA)
and I elected to defer credit until 1989. When does my 15 year compliance
period end? December 31, 2003
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