Housing Tax Credit Program
The Tax Reform Act of 1986 created the tax credit as an incentive for Housing Tax Credit project owners to invest in the development of rental housing for individuals and families with fixed or limited incomes. The Housing Tax Credit, rather than a direct federal subsidy, provides a dollar for dollar reduction (or credit) to offset an owner's federal tax liability on ordinary income. Tax credit interest may be syndicated or sold to generate equity for the developments, thus reducing the necessary mortgage financing and providing more affordable terms. The Housing Tax credit frequently provides the last critical element to ensure the financial feasibility of the project.
The Iowa Finance Authority (IFA) has been the Housing Tax Credit allocating agency for the state of Iowa since 1986. Since then, IFA has helped create nearly 21,000 Housing Tax Credit units in more than 580 projects located in 83 counties throughout Iowa.
IFA also monitors all Housing Tax Credits developments for compliance throughout the designated compliance period.
PROGRAM ELIGIBILITY
An eligible Housing Tax Credit project must be a residential rental property. The property may be apartments, single-family houses, duplexes, town homes or condominiums.
If a project is eligible, the owner will receive a tax credit for 10 years, with one of the following options:
- 20% or more of the units in the project are occupied by individuals or families whose income is 50% or less than the area median gross income and the unit is rent restricted.
- 40% percent or more of the units in the project are occupied by individuals or families whose income is 60% or less than the area median gross income and the unit is rent restricted.
The credit is available to individuals, corporations and partnerships for new construction, substantial rehabilitation or acquisition and rehabilitation of Housing Tax Credit projects.
The credit is available to nonprofit and for-profit organizations.
