LIHTC SELF STUDY QUESTIONS AND CORRECT
ANSWERS LATEST 2025-2026 UPDATE
What is required of the imputed income limitations of the average
income test? - Answer-Under the average income test, the TP must
designate the imputed income limitation for each unit and that imputed
income limitation must be 20, 30, 40, 50, 60, 70, or 80% of AMGI with
the average of the imputed income limitations for each unit must not
exceed 60% of AMGI.
NOTE: this essentially gets you to the same result as the 40-60 test, but
with more flexibility for AMGI percentages per unit
What happens if the income of the occupant of a low-income unit rises
above the applicable income limitation? - Answer-Generally, the unit
will continue to be treated as a low-income unit if the income of the
occupant initially satisfied the income limitation and the unit continues
to be rent restricted.
What happens if the income of the occupant of a low-income unit rises
above the applicable income limitation as designated by the TP under
20-50 or the 40-60 test? - Answer-The Applicable Income Limitation
applies:
,The unit will continue to be treated as a low-income unit if the income
of the occupants of a low-income unit increases to not more than 140%
of the income limitation applicable to the unit.
If the income of the occupants increases above 140% of the applicable
income limitation, the unit will no longer qualify as a low-income unit if
any residential rental unit of comparable size or smaller in the building
is occupied by a new resident whose income exceeds the applicable
income limitation. This is the "next available unit rule".
What is the rent restriction under the 20-50 test and 40-60 test? -
Answer-Rent restriction is 30% of a tenant's imputed income limitation
which is generally based on the number of bedrooms in a unit
How does the 'next available unit rule' work for a TP who has elected
the Average Income Test? - Answer-A unit ceases to be a low-income
unit if:
(i) the income of an occupant of a low-income unit increases above
140% of the greater of (A) 60% AMGI, or (B) the imputed income
limitation designated by the TP with respect to that unit (AKA the
Applicable Imputed Income Limitation), and
(ii) any other residential rental unit in the building that is of comparable
size or smaller than that unit is occupied by a new tenant whose income
exceeds the applicable imputed income limitation
, Under the next available unit rule for TP's who elected the average
income test, how is the applicable imputed income limitation
determined? - Answer-Ask if the new tenant is occupying a low-income
designated unit or a market-rate designated unit.
If the new tenant occupies a unit that was taken into account as a low-
income unit prior to becoming vacant: the applicable imputed income
limitation is the limitation designated with respect to the unit.
Housing tax credit for a year = [_________] ? - Answer-"applicable
percentage" of "qualified basis" of each "qualified low-income building"
Qualified basis = [_______] - Answer-"applicable fraction" of "eligible
basis"
I.e. the portion of the eligible basis attributable to low-income units =
qualified basis
Eligible basis includes [__] and excludes [__] and reduced by [__] -
Answer-Includes:
1. cost acquiring
2. cost of rehabilitating
3. cost of constructing building(s)
AKA - if it's depreciable, it's includable in EB
Excludes:
, 1. cost of land
Reduced by:
1. amount of federal grants financing construction/rehab costs
What is a qualified low-income building? - Answer-Any building which
is part of a "qualified low-income housing project" at all times during
the "compliance period."
When does the compliance period for a qualified low-income housing
project begin and end? - Answer-Begins: first taxable year of the 10 year
credit period
Ends: 15 taxable years later
Must qualify as a low-income housing project continuously for that 15
year period
What are the 2 things that a project must be in order to qualify as a
"low-income housing project"? - Answer-1. rent restricted and
2. satisfy one of the minimum set-aside tests of 42g
What are the 3 minimum set-aside tests? - Answer-1. 20-50 test: At
least 20% of the residential units in the project must be both rent-
restricted and occupied by tenants whose GI is 50% or less of the area
median gross income (AMGI)
ANSWERS LATEST 2025-2026 UPDATE
What is required of the imputed income limitations of the average
income test? - Answer-Under the average income test, the TP must
designate the imputed income limitation for each unit and that imputed
income limitation must be 20, 30, 40, 50, 60, 70, or 80% of AMGI with
the average of the imputed income limitations for each unit must not
exceed 60% of AMGI.
NOTE: this essentially gets you to the same result as the 40-60 test, but
with more flexibility for AMGI percentages per unit
What happens if the income of the occupant of a low-income unit rises
above the applicable income limitation? - Answer-Generally, the unit
will continue to be treated as a low-income unit if the income of the
occupant initially satisfied the income limitation and the unit continues
to be rent restricted.
What happens if the income of the occupant of a low-income unit rises
above the applicable income limitation as designated by the TP under
20-50 or the 40-60 test? - Answer-The Applicable Income Limitation
applies:
,The unit will continue to be treated as a low-income unit if the income
of the occupants of a low-income unit increases to not more than 140%
of the income limitation applicable to the unit.
If the income of the occupants increases above 140% of the applicable
income limitation, the unit will no longer qualify as a low-income unit if
any residential rental unit of comparable size or smaller in the building
is occupied by a new resident whose income exceeds the applicable
income limitation. This is the "next available unit rule".
What is the rent restriction under the 20-50 test and 40-60 test? -
Answer-Rent restriction is 30% of a tenant's imputed income limitation
which is generally based on the number of bedrooms in a unit
How does the 'next available unit rule' work for a TP who has elected
the Average Income Test? - Answer-A unit ceases to be a low-income
unit if:
(i) the income of an occupant of a low-income unit increases above
140% of the greater of (A) 60% AMGI, or (B) the imputed income
limitation designated by the TP with respect to that unit (AKA the
Applicable Imputed Income Limitation), and
(ii) any other residential rental unit in the building that is of comparable
size or smaller than that unit is occupied by a new tenant whose income
exceeds the applicable imputed income limitation
, Under the next available unit rule for TP's who elected the average
income test, how is the applicable imputed income limitation
determined? - Answer-Ask if the new tenant is occupying a low-income
designated unit or a market-rate designated unit.
If the new tenant occupies a unit that was taken into account as a low-
income unit prior to becoming vacant: the applicable imputed income
limitation is the limitation designated with respect to the unit.
Housing tax credit for a year = [_________] ? - Answer-"applicable
percentage" of "qualified basis" of each "qualified low-income building"
Qualified basis = [_______] - Answer-"applicable fraction" of "eligible
basis"
I.e. the portion of the eligible basis attributable to low-income units =
qualified basis
Eligible basis includes [__] and excludes [__] and reduced by [__] -
Answer-Includes:
1. cost acquiring
2. cost of rehabilitating
3. cost of constructing building(s)
AKA - if it's depreciable, it's includable in EB
Excludes:
, 1. cost of land
Reduced by:
1. amount of federal grants financing construction/rehab costs
What is a qualified low-income building? - Answer-Any building which
is part of a "qualified low-income housing project" at all times during
the "compliance period."
When does the compliance period for a qualified low-income housing
project begin and end? - Answer-Begins: first taxable year of the 10 year
credit period
Ends: 15 taxable years later
Must qualify as a low-income housing project continuously for that 15
year period
What are the 2 things that a project must be in order to qualify as a
"low-income housing project"? - Answer-1. rent restricted and
2. satisfy one of the minimum set-aside tests of 42g
What are the 3 minimum set-aside tests? - Answer-1. 20-50 test: At
least 20% of the residential units in the project must be both rent-
restricted and occupied by tenants whose GI is 50% or less of the area
median gross income (AMGI)
