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Low-Income Housing Tax Credit (LIHTC) Compliance

The federal Low-Income Housing Tax Credit (LIHTC) Program is sponsored by the U.S. Treasury Department and administered in Virginia through VHDA. The program is authorized under Section 42 of the Internal Revenue Code of 1986 to encourage development of affordable rental housing by providing property owners with federal income tax credit.

VHDA’s Compliance department monitors properties that have received LIHTC by periodically reviewing that qualified units provide safe, decent and affordable housing and that eligible renters occupy these units.

To maintain qualified tax credits, in addition to other program requirements (we strongly encourage owners to review Section 42 of the IRS Code and their Extended Use Agreement for specific eligibility requirements), owners must meet the general guidelines listed below:

Income Restrictions
Tax credit qualification is available only for units rented to low-income occupants. A property must have at least 20% of its low-income units rented to households with incomes of 50% or less than the area median income (AMI) (20-50), at least 40% of the low-income units rented to households with incomes of 60% or less than the AMI (40-60), OR, at least 40% of the low-income units designated by the taxpayer at 20%, 30%, 40%, 50%, 60%, 70%, and 80% with an average of 60% AMI or less (Average Income).

Average Income Minimum Set-Aside
In March 2018, the “Consolidated Appropriations Act of 2018” established a third minimum set-aside election for new federal housing credit allocations and amended Section 42(g)(1) of the IRS Code of 1986 (which defined a “qualified low-income housing project). The Average Income Minimum Set-Aside election includes new [expanded] income limitations permitted for qualified low-income housing projects at 20%, 30%, 40%, 70%, and 80% AMI. Currently, the HUD published MTSP income limits include 50% and 60% and HERA Special 50% and 60% limits for applicable areas.

For additional information on how to implement Average Income for your project in Virginia, review the VHDA Average Income memo and video playlist with a visual description of Average Income.

VHDA's Average Income Memo VHDA's Average Income Memo (PDF)

VHDA's "Understanding Average Income" Video Playlist VHDA's "Understanding Average Income" Video Playlist


Rent Restrictions
Rents on qualified tax credit units are restricted. Maximum allowable rent is based on the number of bedrooms and AMI as established annually by HUD. If a household pays for utilities, the maximum rent must be adjusted by the applicable utility allowance.

 

Forms and Documents Forms and Documents
Current Tax Credit Compliance forms and documents.

Annual Tax Credit Reporting Process Annual Tax Credit Reporting Process
Current instructions for completing the annual reporting process.

ACH Payment Instructions Annual Tax Credit Monitoring Fee Payment Instructions

ACH Payment Instructions Annual Tax Credit Monitoring Fee - Multiple Payments Log Sheet


Utility Allowance Estimates

Before using any utility allowance schedules posted on VHDA's website, please ensure that your local PHA has adopted VHDA utility allowances for use or that your only local PHA is a VHDA administered program agency.  Detailed information may be found in the documents below.

 

90DayNoticetoResidents-Sample.doc90 Day Notice to Residents - Sample11/7/2016
Bldg-by-Bldg-UAE-Spreadsheet.xlsBldg by Bldg UAE Spreadsheet11/5/2016
IRS-2008-UA-Reg-Update.pdfIRS 2008 UA Reg Update11/4/2016
IRS-2009-UA-Reg-Update.pdfIRS 2009 UA Reg Update11/3/2016
IRS-2016-UA-Reg-Update.pdfIRS 2016 UA Reg Update11/2/2016
Cover Letter - Sample.docxUtility Allowance Cover Letter - Sample9/24/2018
VHDA Utility Allowance Certification.docVHDA Utility Allowance Certification3/22/2018
VHDA Utility Allowance Options and Procedures.docxVHDA Utility Allowance Options and Procedures3/22/2018

 

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    Contact Us

    Compliance & Asset Management Staff

     

    Customer Service

    Toll Free: 877-VHDA-123
    Local: 804-782-1986

     

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    In Virginia: 711
    Toll Free: 800-828-1140

     

    VHDA Fraud, Waste or Abuse Hotline

    Phone: 804-915-3146
    Email: InternalAudit@vhda.com
    Website: Reporting Fraud, Waste or Abuse