What types of expenses are considered "ineligible costs" in LIHTC projects?

In the context of Low-Income Housing Tax Credit (LIHTC) projects, "ineligible costs" refer to expenses that do not contribute directly to the development or operation of a property designated for low-income housing. Therefore, costs that are not related to developing low-income housing are deemed ineligible. This could include various forms of expenditure that do not directly tie to the creation or improvement of housing units available for low-income residents.

While construction costs, permits, maintenance costs for existing properties, and property taxes may be necessary for housing projects, they can be classified in a different context. For example, construction costs and permits are typically necessary expenses associated with building and ensuring the project meets regulations. Maintenance costs are ongoing expenses necessary for keeping a property operational, and property taxes and insurance are part of the ongoing costs of ownership.

The crux of ineligible costs lies in their relevance to the primary mission of the LIHTC program — namely, to develop and maintain affordable housing for low-income individuals and families. Thus, expenses unrelated to this goal do not qualify for eligibility under LIHTC guidelines and are recognized as ineligible costs.