What does the term "eligible basis" refer to in LIHTC?

The term "eligible basis" in the context of the Low-Income Housing Tax Credit (LIHTC) refers to the total development costs that qualify for the tax credit, excluding ineligible costs. This concept is crucial because it establishes the amount of costs that can be used to calculate the tax credit a developer can claim. The eligible basis typically includes costs associated with the acquisition, construction, and rehabilitation of properties intended for low-income housing, but it specifically disregards costs that do not contribute to the project's affordability objectives, such as land acquisition if it exceeds a certain limit or non-residential components of a mixed-use development.

Understanding eligible basis is essential for ensuring that only costs that directly support low-income housing goals are included in the credit calculation, thereby helping to maintain compliance with the regulations surrounding the LIHTC program.