Low-income Housing Tax Credit Program

HHFDC Services for Developers

Low-Income Housing Tax Credit (LIHTC) Program

 

The Low-Income Housing Tax Credit (LIHTC) program is the primary federal vehicle for encouraging the development and rehabilitation of affordable rental housing. By providing developers with a dollar-for-dollar tax credit against their federal tax liability, the program effectively lowers the cost of construction and financing, allowing developers to offer rents at below-market rates. HHFDC serves as the state’s designated credit agency, responsible for allocating these credits to qualified projects through a rigorous, competitive selection process that aligns with the state’s housing needs.

The LIHTC program is a vital financing tool for private developers and non-profit entities. Federal and state tax credits are awarded by the HHFDC to generate project equity or provide a dollar-for-dollar reduction in income tax liability.

The federal LIHTC is administered by the IRS, while the HHFDC manages the program for the State of Hawaii. A state LIHTC equal to 50% of the federal LIHTC is also available to qualified applicants.

Important Note: 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, owners must meet specific guidelines (see Section 42 of the Internal Revenue Code):

Income Restriction

A project must meet one of the following criteria:

  • At least 20% of units rented to households with incomes of 50% or less of the Area Median Income (AMI).
  • At least 40% of units rented to households with incomes of 60% or less of the AMI.

Rent Restriction

Rents are restricted based on unit size and annual HUD-established AMI. If the tenant pays for utilities, rent must be adjusted by the applicable utility allowance.

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

How do I apply?

During the funding round, submit a completed Consolidated Application to the Corporation. Please be sure to review the “Instructions” and “Schedule of Important Dates” included within the application package.

Compliance & Resources