Determining a building's applicable fraction involves a comparison between what two factors?

Determining a building's applicable fraction is essential for calculating the qualification for various tax credits, particularly in the context of housing programs like the Low-Income Housing Tax Credit (LIHTC). The applicable fraction is the ratio of the number of low-income units in a building to the total number of units in that building.

In this case, the two factors involved in calculating the applicable fraction are unit percentage and square footage percentage. The unit percentage refers to the proportion of the total number of units that are designated as low-income units, while the square footage percentage refers to the proportion of the total square footage that these low-income units occupy. These comparisons allow for a more nuanced understanding of how much of the building serves low-income tenants, which is crucial for tax credit eligibility.

By focusing on these proportions, the calculation can reflect the distribution of lower-income housing within the overall building, ensuring that the tax credits are allocated fairly based on the actual usage and availability of these units to qualifying tenants.