LIHTC Financial Management & Tax Credit Allocation 5

Question 1

California's TCAC regulations allow projects to use 'income averaging' with unit designations ranging from 20% to 80% AMI. What is the key averaging requirement?

Accepted Answer

The average AMI of all income-restricted units must not exceed 60% AMI

Answer

Under income averaging, the average of all designated unit AMI levels across the project must be 60% AMI or below.

Question 2

What is the primary risk to LIHTC investors associated with 'burn-off' of tax benefits in later years of the compliance period?

Accepted Answer

Declining tax losses reduce investor yield if alternative income is insufficient

Answer

As depreciation and credits wind down after the 10-year credit period, passive loss benefits diminish, reducing overall investor returns if not anticipated.

Question 3

Under California law, what is the maximum rent a LIHTC owner can charge a tenant occupying a unit restricted to 50% AMI (assuming a 2-person household)?

Accepted Answer

1/12 of 30% of 50% AMI for the applicable household size

Answer

Maximum rent is calculated as 1/12 of 30% of 50% AMI for the applicable unit size, not based on actual tenant income.

Question 4

A syndicator in a LIHTC transaction primarily performs which function?

Accepted Answer

Pools equity from multiple corporate investors and places it into affordable housing partnerships

Answer

Syndicators aggregate equity from multiple corporate tax credit investors and structure the limited partnership to invest in LIHTC projects.

Question 5

Which of the following would INCREASE a LIHTC project's eligible basis, thereby generating more tax credits?

Accepted Answer

Including historic tax credit-qualifying rehabilitation costs

Answer

Qualifying rehabilitation costs for historic tax credit purposes are includable in eligible basis, increasing the credits available on the project.

(LIHTC) California Low-Income Housing Tax Credit Exam Practice Test

(LIHTC) California Low-Income Housing Tax Credit Exam Practice Test

LIHTC Financial Management & Tax Credit Allocation 5