About Low Income Housing Tax Credits

About Low Income Housing Tax Credits

The Federal Low Income Housing Tax Credit Program enjoys the reputation of being the most successful federal housing program in history. The credit, a dollar for dollar reduction in federal tax liability, acts as a catalyst to attract private investment into the historically underserved affordable housing market. The additional capital mitigates the debt burden incurred in the construction and rehabilitation development process. Consequently, less rental income is necessary for operations.
 
Each state will receive a temporary increase of $2.70 worth of credits per capita in 2018-2021, giving New Jersey approximately 20 million in 9% credits, which will generate approximately $190 million in private equity. Four percent tax credits can be generated in conjunction with qualified tax-exempt bond financing under 26 U.S.C. §142.

Affordability is defined as either 50% or 60% or 80% of county median income adjusted for family size. Oversight of the program is handled by each state under the auspices of the Internal Revenue Service. Consequently, compliance with the program is strictly enforced.

The NJHMFA conducts annual file and physical inspections of 20% of the units for 1/3 of its portfolio. Infractions are reported to the Internal Revenue Service, which, in its discretion, may conduct tax audits. Such audits may result in tax credit recapture and imposition of tax penalties.

Given the successful history of the Low Income Housing Tax Credit Program, demand exceeds supply by close to three-to-one. 

NJHMFA currently monitors over 600 tax credit developments that contain more than 50,000 units and assists with the rehabilitation or construction of approximately 20 projects annually. NJHMFA is committed to the success of this program in order to increase the hopes and prosperity of the citizens that it serves.

For more information about Low Income Housing Tax Credits, please review our Tax Credits 101  document.

Feel free to contact the Division of Tax Credit Services at (609) 278-7629 should you have any further questions.

9% Tax Credit Timeline

New Jersey Housing and Mortgage Finance Agency as of April 2020

 Date 
May 14, 2020 Deadline for applications to Multifamily for mortgage financing for the June 25th NJHMFA Board Meeting
May 21, 2020 NJHMFA Board Meeting
June 9, 2020 Applications accepted for Mixed Income Reserve (rolling until September 23 at noon)
June 18, 2020 Deadline for applications to Multifamily for mortgage financing for the August 6th HMFA Board Meeting
June 25, 2020 NJHMFA Board Meeting
August 6, 2020 NJHMFA Board Meeting
Last HMFA Board meeting for conditional 9% mortgage commitments
September 23, 2020 Deadline for 9% applications to Family Cycle, Senior Cycle, Supportive Housing Cycle and Mixed Income Reserve (noon)
June - December 2020 Awards from the Mixed Income Reserve
(As eligible applications are received, the Tax Credit Committee may award on a rolling basis.)
Late December 2020 Family, Senior and Supportive Housing Cycle Awards - approximately 90 days after application deadline.

* This timeline may be affected by any changes made to the QAP, changes in federal legislation, National Pool announcements, Board approval dates, etc.

Frequently Asked Questions (FAQs)
All questions pertaining to 9% applications must be submitted in written format to the following e-mail address: NJHMFAtaxcredits@njhmfa.gov

All questions and answers will be posted on NJHMFA’s website in an FAQ document and will be updated periodically. Please note that project-specific questions, including document review and/or confirmation of eligibility for threshold requirements or points, are not permitted.

Review the application criteria for tax credits