Low-income Housing Tax Credit Program

The Low-Income Housing Tax Credit (LIHTC) Program is a financing tool for private developers and non-profit entities to construct or rehabilitate affordable rental units. Federal and state tax credits may be used to obtain a dollar-for-dollar reduction in income tax liability for 10 years. The tax credit may be sold to a qualified investor in exchange for an equity investment in the project.

The federal LIHTC is a program administered by the Internal Revenue Service. The HHFDC is responsible for the administration of the LIHTC program for the state of Hawaii. A state LIHTC equal to 50% of the federal LIHTC is also available to qualified applicants.

We strongly encourage you to consult with your tax counsel and/or certified public accountant regarding this program prior to submitting an application.

Program Requirements

To qualify for a tax credit, owners must meet these general guidelines in addition to other program requirements (see Section 42 of the Internal Revenue Code for specific eligibility):

Income restriction
:

The tax credit is available only for units rented to low-income occupants. This means that a project must have:

  • at least 20% of its units rented to households with incomes of 50% or less of area median income;
    or
  • at least 40% of the units must be rented to households with incomes of 60% or less of area median income.

Rent restriction
:

Low-income rents are restricted based on the number of bedrooms in the unit and the area median income as established annually by HUD. If the tenant pays for utilities, the rent must be adjusted by the applicable utility allowance.

Please refer to the State of Hawaii’s current Qualified Allocation Plan for program requirements.

How do I apply for tax credits?

Contact HHFDC at (808) 587-0567 for an application package. HHFDC provides staff assistance for the tax credit program and reviews developers’ applications. Awards of Low Income Housing Tax Credits are subject to approval of the HHFDC Board of Directors.

Application Deadlines
:

  • Competitive LIHTC (9%)
    ……………………
    January / February of each year
  • Non-Competitive LIHTC (4%)
    …………….Open year round

with allocation of private activity tax-exempt bond

Please contact program staff for the dates. Subject to change.

Other Information