Iowa Finance Authority
Programs

Housing Tax Credit Program

The Tax Reform Act of 1986 created the tax credit as an incentive for Housing Tax Credit project owners to invest in the development of rental housing for individuals and families with fixed or limited incomes. The Housing Tax Credit, rather than a direct federal subsidy, provides a dollar for dollar reduction (or credit) to offset an owner's federal tax liability on ordinary income for a 10-year period.

Tax credit interest may be syndicated or sold to generate equity for the developments, thus reducing the necessary mortgage financing and providing more affordable terms. The Housing Tax Credit frequently provides the last critical element to ensure the financial feasibility of the project.

The Iowa Finance Authority (IFA) has been the Housing Tax Credit allocating agency for the state of Iowa since 1986. Since then, IFA has helped create nearly 21,000 Housing Tax Credit units in more than 580 projects located in 83 counties throughout Iowa.
 
IFA also monitors all Housing Tax Credit developments for compliance throughout the designated compliance period. More information about housing tax credit compliance is available here:

 Scoring and Reservation Procedures 
 An administrative review is conducted on each Application. If an Application submits the Market Analysis and Application Fee and meets the Threshold Criteria, the Applicant will be competitively scored using Scoring Criteria.  If the Application scores highly enough to be competitive, a reservation of tax credits will be recommended to the IFA Board of Directors.  For specific information, refer to the Qualified Allocation Plan. The IFA Board of Directors then approves reservations for successful Applicants. A non-refundable reservation fee is assessed at 1% of the total 10-year tax credit amount.

 

 Determination of Credit Amount
 The amount of credit is limited to no more than the amount necessary for the financial feasibility of the project. The credit is determined by taking a percentage of the "qualified" cost of development. The maximum percentage for new construction and rehabilitation is 9%. The maximum percentage for acquisition and federally subsidized projects is approximately 4%.

 
 Project Eligibility   

  • Must be a residential rental property. 
  • May be apartments, single-family houses, duplexes, town homes or condominiums.
  • May be new construction, substantial rehabilitation or acquisition and rehabilitation projects.
  • Project must meet one of the following requirements:
    • 20% or more of the units in the project are occupied by individuals or families whose income is 50% or less than the area median gross income and the unit is rent restricted.
    • 40% percent or more of the units in the project are occupied by individuals or families whose income is 60% or less than the area median gross income and the unit is rent restricted.

Applicant Eligibility

  • Individuals
  • Nonprofit and for-profit organizations
  • Partnerships

 Application Period

  • Annual

 

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