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. Per the DRAFT 2020-2021 allocation plans, SDHDA is proposing to change the due date for the annual applications to be the last working day of July at 5:00 p.m. Central Time. This change is currently available for public comment. Completed applications must be delivered (via U.S. Postal Service, private mailing service, hand delivery, or submitted via SDHDA's on-line submission) to SDHDA by 5:00 p.m. Central Time on the applicable due date. Applications via facsimile or e-mail will NOT be accepted.
$3.2 million available
$640,000 per project
$800,000 per developer
$320,000 non-profit 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 August 9, 2019. For more information regarding the worksheet or utility calculation, please contact Andy Fuhrman at email@example.com 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