Credit without a volume cap allocation requires 50 percent of aggregate basis financed by volume-cap bonds, or 25 percent for issues after 2025

bond.financial.aggregate_basis_financed_threshold_for_credit_without_allocation · v1.0.0

A building financed with tax-exempt bonds subject to the section 146 volume cap can claim the low-income housing credit without a housing credit dollar amount allocation only if a minimum share of the aggregate basis of the building AND THE LAND on which it is located is financed by such obligations. That share is 50 percent, or 25 percent where one or more of the obligations is part of an issue whose issue date is after 31 December 2025 and provides financing for not less than 5 percent of that aggregate basis. The 25 percent alternative was added by Pub. L. 119-21 on 4 July 2025 and applies to buildings placed in service in taxable years beginning after 31 December 2025. The denominator includes land, which is the detail most often got wrong, and the test is measured building by building rather than across the project. This is a section 42 condition, but it arises only on a bond deal and it is the reason a 4% transaction is structured around the bond size at all.

Confidence

high

Effective from

2025-07-04

Last reviewed

2026-08-30