The Low-Income Housing Tax Credit (LIHTC) provides a federal tax credit to investors in affordable housing. The LIHTC can be used each year for 10 years and is allocated to the owner of an affordable housing development. Investors take an ownership interest in the development to utilize the tax credits, thereby generating equity to construct or acquire and rehabilitate the development. For 2014, the Internal Revenue Service (IRS) has allocated LIHTC to each state in an amount equal to the greater of (i) $2.30 times its population, or (ii) $2,635,000. Missouri also has a state LIHTC and may allocate an amount annually equal to 100 percent of the federal LIHTC allocated to Missouri by the IRS.

The LIHTC is limited to a percentage of the Qualified Basis, based on depreciable basis and the percentage of affordable units in the development. The minimum number of units a development must have to qualify for LIHTC is (i) 40 percent of the total number of units affordable to persons at 60 percent of the area median income, or (ii) 20 percent of the total number of units affordable to persons at 50 percent of the area median income.

Each year, MHDC prepares a Qualified Allocation Plan (QAP) which sets forth the process MHDC will use to administer both the federal and state LIHTC. The most current QAP is available here.

Congress has delegated the administration of the LIHTC to state agencies to ensure good, quality housing is available where it is most needed. MHDC is charged not only with the allocation of credit but also with assuring compliance with all LIHTC statutes and regulations. This includes, but is not limited to, the performance of physical inspections of all affordable developments and reviews of management and occupancy procedures during the Compliance Period (as such term is defined in Section 42 of the Internal Revenue Code) and the extended use period. The Tax Credit Compliance Manual is available here.

Type of Assistance

Federal and state housing tax credit, which can be sold to investors to generate equity for the proposed development.

Eligibility Requirements

Developers (for-profit and not-for-profit) are eligible to apply for the LIHTC. Applicants must demonstrate prior, successful housing experience and engage the services of housing professionals such as architects, appraisers, attorneys, accountants, contractors, and property managers with demonstrable LIHTC and housing experience. Developers must have the financial capacity to successfully complete and operate the proposed housing development.

Proposed housing developments must:

Fund Availability

Determined annually by the IRS and is dependent on the population of the state of Missouri.

Application Process

The Commission sets the schedule annually. A Notice of Funding Availability (NOFA) is published which sets forth the amount and type(s) of funding available and the deadline for applications for such funding.

For additional information contact Jennifer Schmidt at 816.759.6654 or jschmidt@mhdc.com.