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Tax Credit Programs

Low Income Housing Tax Credits (LIHTC)

The Program: Tax credits provide direct federal income tax savings to individuals or corporations that invest funds in rental housing developments with apartments set aside for low-income households. To use this tax incentive, developers typically form limited partnerships with investors who contribute equity capital in exchange for tax savings. Once an allocation is made and construction is completed, Tax credits can be claimed annually for a ten-year period.

Eligible Projects: Many types of rental developments qualify, but MFA establishes incentives to stimulate development of particular types of housing, and prohibits others that do not meet MFA policy. Federal rules require the projects to be 1) located in New Mexico; 2) permanent residential structures used year-round on a non-transient basis (except for nonprofit provided housing for the homeless); 3) subject to a low-income use restriction agreement; 4) available to the general public; and 5) in compliance with all applicable local, state and federal laws pertaining to handicapped accessibility and adaptability. MFA monitors projects annually to ensure that all these conditions remain in effect.

Low-Income Use Restriction: Project owners must agree to set aside a certain percentage of the apartments, at least:

  • Twenty percent of the units for households earning no more than 50 percent of the area median income adjusted for family size; or
  • Forty percent of the units for households earning no more than 60 percent of the area median income adjusted for family size.

The set aside units must also be “rent restricted,” meaning that rents for various apartment sizes (including allowances for tenant-paid utilities) may not exceed 30 percent of the qualifying income levels. The development must be maintained as low-income housing for at least 30 years.

Obtaining Tax Credits: In 2017, each state has an annual tax credit authority equal to $2.35 per state resident. New Mexico’s annual authority is approximately $4.89 million. The process used by MFA to evaluate applications and allocate credit is described in MFA’s Qualified Allocation Plan (QAP) available on our website. An application, including detailed financial information and various supporting documentation, must be submitted to MFA for review and evaluation, and the process is competitive. The final determination of how much credit will actually be awarded is made when the project is complete. Each year MFA conducts one allocation round to select the projects that will receive tax credits and applications are usually due at the middle of February.

Tax Credit Calculation: The example below illustrates the way tax credit amounts are calculated.

Total Development Cost $1,100,000
Less Land Value (100,000)
Less Other Non-depreciable Costs (35,000)
Total Eligible Basis $  965,000
Application Fraction (% set-aside) 100%
Qualified Basis $  965,000
Applicable Credit Percentage 9%
Annual Tax Credit $   86,850
10 Year Tax Credit $  868,500
Pricing $    0.70
Equity Available to Project $  607,950

 

Tax Credits and Other Programs: Tax credits can be combined with several of MFA’s other programs, including tax exempt bonds, Risk Sharing construction/permanent mortgages, HOME/rental loans, Housing Trust Fund loans, Primero Investment Fund loans and NM Affordable Housing Tax Credits. HOME/rental funds are typically awarded simultaneously with tax credit allocations.

 

DDAs and QCTs

Qualified Contracts

2018 Tax Credit Round

2018 QAP Training Presentation

2018-2019 Public Hearing Agenda

Memo for Public Hearing October 2, 2017

2018 Draft Qualified Allocation Plan clean

2018 Draft Qualified Allocation Plan redline

2018 Design Standards clean

2018 Design Standards redline

2018 QAP Training

2018 Notice of Public Hearing and Request for Public Comments

2018 QAP Areas of Statistically Demonstrated Need

2017-2018 LIHTC Calendar


2017 Tax Credit Round

2017 Carryover and 8609 Application Training

2017 Placed in Service - 8609 Application

2017 Carryover Application + 10 Percent Test + Construction Start

2017 LIHTC Application Package

2017 LIHTC Underwriting Supplement

2017 Housing Tax Credit Ceiling

HOME/LIHTC Term Sheet – 2017 9% Low Income Housing Tax Credit

2017 QAP Training Presentation

2017 Qualified Allocation Plan as approved by the Honorable Governor Susana Martinez on 12-8-16

2017 Qualified Allocation Plan as approved by the Honorable Governor Susana Martinez Signature on 12-8-16_Redline

Final 2017 Design Standards

2001-2017 Applications

Comparison of 2016 and 2017 Design Standards

2016-2017 LIHTC Calendar

2017 QAP Areas of Statistically Demonstrated Need

2001 - 2017 Awards


2016 Tax Credit Round

2016 Housing Tax Credit Carryover - 8609 Application Workshop Presentation

2016 Placed in Service - 8609 Application

2016 Carryover Application

2001 - 2016 Awards

2016 Qualified Allocation Plan Approved by Governor

2016 QAP and Application Training Presentation

2016 LIHTC Application Package

2016 Tax Credit Ceiling

2016 Multifamily Design Standards

2015 - 2016 LIHTC Calendar

2016 QAP Areas of Statistically Demonstrated Need

2016 Underwriting Supplement

2016 HOME/LIHTC Term Sheet

2001 - 2016 Applications

2016 Housing Credit Income Limits and Maximum Rents

Prior Year Awards

9 Percent Tax Credit Awards 2001 - 2016

4 Percent Tax Credit Awards 2001 - 2016

LIHTC FAQ’s

LIHTC Application FAQ's

link to more info >
LIHTC Archives

Qualified Action Plans (QAP's)

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Design Competition Winners

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LIHTC Income and Rent Limits

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Charitable Trust

Save 50 percent on your state taxes when you make a donation to affordable housing construction

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