Posted by Nate(DC) on October 23, 2003 at 04:15:01:
My experience has been that in most cases, it is not worth the hassle and paperwork to go through just for one unit.
You only get a credit of about 8% of your eligible basis, annually for 10 years. So if you built a home that cost $100,000 then you could get a credit of $8,000 for 10 years. That sounds good, except that
-not all of your $100,000 will be eligible basis (land and some permanent financing costs aren’t included) so you’ll actually end up with less than $8,000 credit
-Additionally, some states limit the amount of credit you can be awarded per unit, so you might get even less than you think
-You’ll have to pay an up-front application fee of $500-$1000 to even apply
-As I said, it is a competitive process. There are more applicants than there are credits. There is NO guarantee that you will be awarded credits, in which case your $500-$1000 is down the tubes.
-If you go through all that, you might get hit with the AMT and get little to no net benefit from the credit. You need to have your accountant check to see if having the credit would trigger anything.
If you still are interested, contact your state housing agency and find out when the next application round is. Ask for the application materials and read them carefully. That will provide further guidance.