How does the LIHTC 130% basis boost work?

What qualifies for the boost

A Qualified Census Tract is one where either 50%+ of households earn below 60% of area median gross income, or the poverty rate is at least 25%. HUD publishes the QCT list annually; a project qualifies if it is in a QCT designated for the placed-in-service year or any of the three preceding years. A Difficult Development Area is one HUD designates as having high construction, land, or utility costs relative to AMGI — the boost applies to the entire eligible basis in a DDA.

Most state housing finance agencies have authority under §42(d)(5)(B)(v) to designate projects for the boost outside HUD-mapped QCTs/DDAs — typically high-poverty tracts, projects serving ≤30% AMI households, or jurisdictions with a declared affordable-housing crisis. Always check the relevant state's Qualified Allocation Plan (QAP).

The math

For underwriting, track the basis boost separately so credit pricing applies to the higher credit amount. A $0.90/credit syndication on a $10M eligible basis yields roughly $10.5M in tax-credit equity WITH the boost versus about $8.1M without it.