What is the maximum amount of tax credits allocated per project under LIHTC?

The correct understanding of the allocation of tax credits under the Low-Income Housing Tax Credit (LIHTC) program revolves around the Eligible Basis of a project. The maximum amount of tax credits allocated to a project is not a fixed figure determined by federal law; rather, it is calculated based on the eligible basis, which takes into account various factors such as the cost of construction, rehabilitation, and land.

The eligible basis can vary significantly from project to project, depending on its location, size, and the specific costs associated with its development. States have flexibility in dictating the maximum credits that can be allocated, which are ultimately capped by the formula based on the eligible basis. Consequently, this makes the allocation of credits project-specific and rooted in detailed calculations rather than a generic fixed amount or an arbitrary request by the developer.

Understanding that the allocation of tax credits is influenced by the specifics of each project allows beneficiaries to better navigate the LIHTC program and align with the program's objectives of promoting affordable housing development.