Can someone be so kind as to please explain to me what the heck apartment tax credit limited is for?

Question

- I think that is what it is called. I am looking for an apartment in fort worth and when I find a place it has that tax limited attatched to it and I cant rent there because I make too much money.

-Also, the three I looked at today that all had that had the maximum I can earn to be $27,000 a year. Is that how much the salary cap is in Texas for the tax credit limited thing or can it change from apartment to apartment.?

-I dont get why they would do that. I have money, they have an empty apartment, it seems so easy.

Answer 1

It maybe a fancy word for section 8. If you make to much money to live there you probably don't want to.

Answer 2

What you are referring to is called "Low Income Housing Tax Credit " or LIHTC, also known as a Tax Credit or Affordable program.  It is not Section 8, which would mean it is owned by the city, county, state or HUD.  The Tax Credit program is run by the IRS and to put it in simplest terms, this apartment community has been given money by the IRS to either build or upgrade this community.  In return, the community must enter into a contract to rent either all or a portion of the apartments in the community at a certain rent set by the median income of that area.

For instance, if you are in Fort Worth, there are different areas in Fort Worth that have "median incomes".  Downtown would be one income, a suburb would be another income.  They calculate the average income of that area and, depending on what percentage the community is given by the IRS, you can only make a percentage of the median income for that area to live in that community.  

Here's a good example - I manage two high rise downtown loft buildings in Denver.  One of my buildings was put on the Tax Credit program back in 1996 because the building was an abandoned shell built in 1890.  The IRS gave us 10 million to renovate (and we don't have to pay this back).  We in return had to set aside 40% of the lofts in the building (approximately 49 out of 117) for the program.  Right now, normal rents run around $1000 for a one bedroom.  But for those 49 apartments we have to set aside for the tax credit program, the rent is $766, and the person living there cannot make more than $30,120 per year (gross, not net).  

Now, you ask why we do that.  Well, several reasons.  One, we could not have bought the buildings and renovated them without some financial help.  Two, my company gets a tax break, which always helps.  Three, it promotes urban renewal, meaning that the building was restored and is now in use in a vibrant downtown setting, benefiting not only people who want to live downtown but also downtown itself - giving a good mix of commercial and residential buildings that makes a city thrive.  Fourth, it provides a place to live for people who couldn't normally live downtown - people that work in hotels, or restaurants, or the shops on the 16th Street Mall.  We all talk about "live where you work" - and that's what this program offers.  Fifth, it's  environmentally friendly, because it reduces the amount of people driving into downtown every day, and it gives a diversity in the demographic mix of people downtown.  

There is nothing different about a tax credit apartment and a regular apartment - some people might think that we make nice upgrades to the apartments that charge regular price, and keep the tax credit ones nasty - absolutely not true - they are exactly the same.  And the people that apply and qualify for tax credit units have to meet the same criteria that everyone else does - they have to meet background and credit criteria, and provide 3rd party proof of what they make.  Also, full time students are not eligible for the tax credit apartments, because the government feels they are already getting a break on student loans and discounts.  So it's not even a student thing.

It can change from apartment building to apartment building - as I said, I manage 2 high rises right across the street from each other.  Each building is on a different "percentage of median income" plan, so one building is actually more expensive than the other.   My buildings are actually only partially tax credit - the other portion is just regular rents, so if you came to my building, and you didn't qualify for tax credit, we could offer you a loft at the regular rent.  I think you are finding communities that are 100% tax credit.

Sorry I'm long winded, but I wanted to make sure you understood it's not just as simple as "they have an empty apartment, I have money, they should rent to me".