Glossary

Qualified Basis

Eligible basis, after any applicable basis boost, multiplied by a project's applicable fraction -- the actual figure to which the applicable percentage is applied to compute a LIHTC project's annual tax credit.

Qualified basis is the operative number in the LIHTC credit formula: eligible basis captures what portion of development cost is credit-eligible in principle, while the applicable fraction narrows that further to the portion of the building actually serving as low-income housing, and qualified basis is the product of the two. In a 100% affordable project the applicable fraction is 100% and qualified basis equals boosted eligible basis outright; in a mixed-income project, only the low-income share of the building's cost generates credit, even though the developer built and financed the market-rate units alongside it. Because qualified basis must be maintained throughout the 15-year compliance period -- a building's qualified basis can fall if low-income units are converted to market-rate use, occupied by ineligible households, or taken out of service -- a drop in qualified basis during that window is the specific triggering event for LIHTC recapture, making the calculation an ongoing compliance obligation tracked annually, not just a one-time underwriting exercise at allocation.