Housing Tax Credits
The Low Income Housing Tax Credit Program was designed as an incentive for construction and rehabilitation of housing for low-income households.
Created by the Internal Revenue Code of 1986, the Housing Tax Credit Program offers a reduction in tax liability to owners, subject to restrictions. The annual housing tax credit amount is intended to provide the owner or investor a return which provides a "present value" of either 30% or 70% of the qualified costs of the low-income units in the development. Depending on the project type, the qualified project costs (depreciable costs) will be eligible for either 30% present value (correlating to 4%) or 70% present value (correlating to 9%). The maximum allowable credit amount is determined by multiplying the annual percentage rate (approximately 4% or 9%) by the qualified costs attributed to the designated low-income units in the project.
Developers of housing tax credit projects typically raise equity capital for their projects by syndicating the tax credits to investors who are willing to invest in the project. The investors' return is the annual tax credit and other economic benefits generated by the project. The U.S. Department of Treasury annually allocates in excess of $3.1 million to South Dakota. SDHDA, as the credit-issuing agency, is responsible for the administration of the tax credits.
Housing Tax Credit Applications
Applications are due annually on the last working day of August at 5:00 p.m. Central Time. Completed applications must be delivered via SDHDA's on-line submission (preferred), via U.S. Postal Service, private mailing service or hand delivery to SDHDA by 5:00 p.m. Central Time on the applicable due date. Applications via facsimile or e-mail will NOT be accepted. The HOME-HTC Application and pro-forma for the 2022 application round will be dated as July 2022 and will be available in the near future.
The following will be applied to the LIHTC funds available for 2022:
$3.0 million available
$600,000 per project
$750,000 per developer
$300,000 non-profit set aside
$600,000 Indian Reservation set aside
- Applicants are no longer allowed to submit utility allowance calculations from the local Public Housing Authority. Applicants may document utility calculations from service providers, use the HUD Utility Schedule Model, or they may utilize the SDHDA Utility Allowance Worksheet to request the utility calculation from SDHDA. Please allow ten working days for the calculation of utilities from SDHDA. Request for utility allowance calculations must be received by July 16, 2021. For more information regarding the worksheet or utility calculation, please contact Andy Fuhrman at firstname.lastname@example.org or by calling (605) 773-3181.
*You will need Adobe Acrobat to fill out the application form. In order to save the application form, you will need to have Adobe Acrobat Professional 7.0
Call or e-mail Scott Rounds, Housing Development Officer, with your Housing Tax Credit questions.
Phone: (605) 773-4532