The Qualified Basis for LIHTC is calculated using which of the following?

The calculation of the Qualified Basis for the Low-Income Housing Tax Credit (LIHTC) is determined by taking the Eligible Basis and multiplying it by the Applicable Fraction. This means that the total basis that qualifies for the tax credit is directly related to the cost of the property that qualifies (the Eligible Basis) and the portion of the property that is set aside for low-income tenants (the Applicable Fraction).

The Eligible Basis represents the cost of developing the property, including land, building costs, and certain other costs, but it must be adjusted to reflect only the portion that is set aside for low-income housing. The Applicable Fraction indicates what percentage of the project is designated for low-income occupancy. By multiplying these two components, you arrive at the Qualified Basis, which is the amount eligible for the tax credit, demonstrating the targeted nature of the benefit. This ensures that tax credits are given proportionally based on how much the property serves low-income residents.