Understanding the Difference between Qualified Basis and Eligible Basis in Affordable Housing

At Olympia ManagementOlympia Management, Inc. exists to meet the needs of the affordable housing community by providing top-quality living conditions, excellent management, compassionate interaction with tenants, and cons... More, we pride ourselves on providing exceptional affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More options to individuals and families in need. As part of our commitment to transparency and education, this blog aims to shed light on the difference between two important terms in the affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More industry: qualified basisQualified basis is the base that is multiplied by the credit percentage to determine the annual credit. The qualified basis equals the applicable fraction times the eligible basis. More and eligible basisEligible basis is a component of the qualified basis of an LIHTC project. It is generally equal to the adjusted basis of the building, excluding land but including amenities and common areas. More. Understanding these concepts is crucial for both tenants and those involved in affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More development and management.

Key Points:

1. What is qualified basisQualified basis is the base that is multiplied by the credit percentage to determine the annual credit. The qualified basis equals the applicable fraction times the eligible basis. More?
   • The qualified basisQualified basis is the base that is multiplied by the credit percentage to determine the annual credit. The qualified basis equals the applicable fraction times the eligible basis. More refers to the portion of a low-income housing tax credit (LIHTC)A tax incentive intended to increase the availability of low-income housing. The program provides an income tax credit to owners of newly constructed or substantially rehabilitated low-income rental h... More property that is eligible for tax creditsA reduction in tax liability. Benefits an owner of a property claims under the low-income housing tax credit program. More.
   • It is calculated based on the number of affordable units and their income restrictions.
   • The qualified basisQualified basis is the base that is multiplied by the credit percentage to determine the annual credit. The qualified basis equals the applicable fraction times the eligible basis. More is important for developers as it determines the amount of tax creditsA reduction in tax liability. Benefits an owner of a property claims under the low-income housing tax credit program. More they can receive.
2. What is eligible basisEligible basis is a component of the qualified basis of an LIHTC project. It is generally equal to the adjusted basis of the building, excluding land but including amenities and common areas. More?
   • The eligible basisEligible basis is a component of the qualified basis of an LIHTC project. It is generally equal to the adjusted basis of the building, excluding land but including amenities and common areas. More represents the total development cost of a low-income housing projectAll of the buildings included in a group at a housing development for compliance purposes, as indicated on each building’s form 8609 line 8b. The default is that each building is a separate project ... More that can be used to claim tax creditsA reduction in tax liability. Benefits an owner of a property claims under the low-income housing tax credit program. More.
   • It includes both the cost of constructing or rehabilitating the property and certain soft costs.
   • The eligible basisEligible basis is a component of the qualified basis of an LIHTC project. It is generally equal to the adjusted basis of the building, excluding land but including amenities and common areas. More serves as the foundation for determining the amount of tax creditsA reduction in tax liability. Benefits an owner of a property claims under the low-income housing tax credit program. More a projectAll of the buildings included in a group at a housing development for compliance purposes, as indicated on each building’s form 8609 line 8b. The default is that each building is a separate project ... More is eligible to receive.
3. The relationship between qualified basisQualified basis is the base that is multiplied by the credit percentage to determine the annual credit. The qualified basis equals the applicable fraction times the eligible basis. More and eligible basisEligible basis is a component of the qualified basis of an LIHTC project. It is generally equal to the adjusted basis of the building, excluding land but including amenities and common areas. More:
   • While both terms relate to the allocation of tax creditsA reduction in tax liability. Benefits an owner of a property claims under the low-income housing tax credit program. More, there are distinct differences between them.
   • The qualified basisQualified basis is the base that is multiplied by the credit percentage to determine the annual credit. The qualified basis equals the applicable fraction times the eligible basis. More focuses specifically on the portion of the projectAll of the buildings included in a group at a housing development for compliance purposes, as indicated on each building’s form 8609 line 8b. The default is that each building is a separate project ... More that contains affordable units and meets the income restrictions.
   • The eligible basisEligible basis is a component of the qualified basis of an LIHTC project. It is generally equal to the adjusted basis of the building, excluding land but including amenities and common areas. More, on the other hand, encompasses the entire development cost, including both affordable and market-rate units.
4. Importance for tenants:
   • Understanding the difference between qualified basisQualified basis is the base that is multiplied by the credit percentage to determine the annual credit. The qualified basis equals the applicable fraction times the eligible basis. More and eligible basisEligible basis is a component of the qualified basis of an LIHTC project. It is generally equal to the adjusted basis of the building, excluding land but including amenities and common areas. More can help tenants determine their eligibility for affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More.
   • By knowing the qualified basisQualified basis is the base that is multiplied by the credit percentage to determine the annual credit. The qualified basis equals the applicable fraction times the eligible basis. More, tenants can ensure that the property they are interested in meets the income requirements necessary for affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More.
5. Importance for developers and managers:
   • For developers and property managers, grasping the distinction between qualified basisQualified basis is the base that is multiplied by the credit percentage to determine the annual credit. The qualified basis equals the applicable fraction times the eligible basis. More and eligible basisEligible basis is a component of the qualified basis of an LIHTC project. It is generally equal to the adjusted basis of the building, excluding land but including amenities and common areas. More is essential when planning, financing, and managing affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More projects.
   • Properly allocating the qualified and eligible basisEligible basis is a component of the qualified basis of an LIHTC project. It is generally equal to the adjusted basis of the building, excluding land but including amenities and common areas. More allows for accurate calculation of tax creditsA reduction in tax liability. Benefits an owner of a property claims under the low-income housing tax credit program. More, ensuring financial viability and compliance with affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More regulations.

At Olympia ManagementOlympia Management, Inc. exists to meet the needs of the affordable housing community by providing top-quality living conditions, excellent management, compassionate interaction with tenants, and cons... More, we firmly believe that knowledge is power, and by understanding the nuances of affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More terms like qualified basisQualified basis is the base that is multiplied by the credit percentage to determine the annual credit. The qualified basis equals the applicable fraction times the eligible basis. More and eligible basisEligible basis is a component of the qualified basis of an LIHTC project. It is generally equal to the adjusted basis of the building, excluding land but including amenities and common areas. More, tenants, developers, and managers can make informed decisions that positively impact individuals and communities.

We remain steadfast in our commitment to providing high-quality living conditions, exceptional management, and unwavering support for the well-being of our residents. By prioritizing security, peace of mind, and affordability, Olympia ManagementOlympia Management, Inc. exists to meet the needs of the affordable housing community by providing top-quality living conditions, excellent management, compassionate interaction with tenants, and cons... More continues to elevate the standard of affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More across the nation.

If you have any further questions or would like to learn more about our affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More options, please do not hesitate to reach out to our dedicated team. We are here to help you every step of the way.