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  • Low Income Housing Tax Credit Program - Getting Started

    1. Click here to read a basic introduction to the Low-Income Housing Tax Credit (LIHTC) Program. 
    2. LIHTC applications are both complex and costly. Before beginning an application contact a Commercial Lending Officer to discuss your development plan.
    3. Review documentation for the current credit year on this web site.
      1. WHEDA's current Qualified Allocation Plan (QAP), which establishes criteria for the allocation of both competitive and noncompetitive tax credit for the State of Wisconsin. The Plan specifies application threshold requirements and timeframes for the acceptance of competitive and noncompetitive applications.
      2. Credit is awarded based on a point scoring system. The current LIHTC Application and Self-Scoring Exhibit further specify requirements for obtaining an allocation of credit. Access to the LIHTC Application and Self-Scoring Exhibit is within LOLA, the LIHTC OnLine Application, a secure, web-based application. Applications for LIHTC must be submitted through LOLA. Organizations must request and have an account established by WHEDA prior to gaining access to LOLA.  
      3. Review all other available online LIHTC application documentation for the current credit year. 
    4. Considerations:
      1. How viable is the proposed market? A market study helps you assess the market and is a requirement for all LIHTC applications.  
      2. Interested in utilizing LIHTC for an existing multifamily property? A capital needs assessment identifies and quantifies the building's current physical condition and future physical and financial needs and is a requirement for all LIHTC applications.  
      3. Both market studies and capital needs assessments must be prepared according to standards established by WHEDA.
    5. Additionally, if you have not previously developed a tax credit project, WHEDA strongly suggests consulting a tax professional regarding the rules and regulations of the LIHTC program.

    FAQs

  • How do tax credits work?

    Investors and/or owners invest cash in a tax credit housing development and receive a dollar-for-dollar credit against their federal income tax liability each year for 10 years. In exchange for receiving the credit, owners agree to set aside for 30 years at least 20% of the units for households with income less than 50% of the county median income (CMI), or set aside at least 40% of the units for households with income less than 60% of CMI.

    What types of developments are eligible for tax credits?

    • New construction of residential rental units
    • Acquisition of existing residential rental developments with a rehabilitation component of at least $6,000 per set-aside unit or 20% of the adjusted basis in the building(s), whichever is greater.
    • Rehabilitation of existing residential rental developments of at least $6,000 per set-aside unit
    • A development can serve families, persons with special needs, seniors, and seniors in Residential Care Apartment Complexes (RCACs)

    If you have a development proposal that may qualify and would like to know more about tax credits, contact a  Commercial Loan Officer.

    What types of developments may not use tax credits?

    • Transient housing
    • Nursing Homes, life care facilities, retirement Homes, licensed Community Based Residential Facilities (CBRFs)
    • Mobile Home parks
    • Owner-occupied buildings with four or fewer units
    • Buildings receiving Section 8 Moderate Rehabilitation Assistance unless under the Stewart B. McKinney Homeless Assistance Act

    How are tax credits awarded?

    Tax credits are awarded to proposals that meet the WHEDA standard for housing quality and need. Among other criteria, we review:

    • market
    • development team experience
    • community support
    • development characteristics
    • population served

    What benefits do tax credits give communities?

    • More quality housing with affordable rents for working families.
    • Available, reasonably priced housing makes a community more attractive to employers.
    • Developments for elderly individuals allow seniors to age in place and stay active in the community. They can enjoy the benefits of housing with services. This frees up Homes for first-time Homebuyers.
    • Tenants paying affordable rents have more discretionary income to spend in the local economy or pay for needed services. 

    Can I combine tax credits with other sources of funds?

    Yes. In fact, often other resources are needed to keep primary financing at a level that permits the development to be feasible at affordable rent levels. Although there are restrictions, tax credits may be combined with WHEDA financing, Community Development Block Grants (CDBG), Federal Home Loan Bank grants or loans, the Home Investment Partnership Program, and other types of local loans or grants. For more detailed information, contact a Commercial Lending Officer.