This is a feasibility model, not tax advice. State QAPs, bond rules, developer fee caps, eligible basis rules, placed-in-service timing, income averaging, tax-exempt use rules, and PILOT/tax abatement rules must be verified by LIHTC counsel, accountant, syndicator, and the allocating agency.
Project Setup
Reserved for later connection to another underwriting model.
Affordability Mix
NJ note: the 2026 QAP says income averaging may use 20%-80% AMI designations in 10% increments and, for underwriting, the average of tax-credit-eligible designations may not exceed 57.5% AMI. Municipal UHAC/fair-share credit may impose a different rent/income mix.
Why rent is still an assumption: HUD/MTSP tables give the maximum gross rent by AMI, bedroom count, and household-size convention, but underwriting still needs an achievable average rent. Use the lower of the allowed LIHTC/UHAC rent, the actual voucher/subsidy rent, any local restriction, and market support. Also subtract tenant-paid utility allowance when moving from gross rent limit to collectable tenant rent.
Development Budget
Assessor land/building split can be a starting point, but investor/appraiser/tax counsel may require a different allocation.
Use 30% for QCT/DDA or state-designated boost when allowed.
Eligible basis quick guide:
- Usually eligible: depreciable building acquisition basis, rehab hard costs, contractor overhead/profit, architecture/engineering, permits, eligible construction-period soft costs, and the eligible portion of developer fee.
- Usually not eligible: land, reserves, syndication/investor costs, many permanent financing costs, operating deficit reserves, marketing/lease-up reserves, commercial/non-residential costs, and costs paid by grants that require basis reduction.
- Important: eligible basis is not the same as total development cost. Ineligible costs increase uses but do not create tax credits, so they usually worsen the funding gap.
Credits & Investor Equity
Use less than 100% to reserve for adjusters/holdbacks.
Annual credits = acquisition qualified basis x acquisition credit rate + rehab qualified basis x rehab credit rate.
LIHTC equity = annual credits x credit period x credit price x equity pay-in %.
LIHTC equity = annual credits x credit period x credit price x equity pay-in %.
Credit price: the tax credit investor or syndicator effectively decides this through the market. A lower credit price, such as $0.85 instead of $0.90, can make the investment more attractive to the investor, but it gives the project less equity and usually increases the funding gap. You cannot lower the price to "fill up" more project capital; it does the opposite.
Operations & Permanent Debt
Optional. Leave 0 to ignore LTV cap.
Optional. Overrides calculated debt when greater than 0.
Tax/PILOT and permanent debt: choose whether the opex ratio already includes property tax/PILOT. If it does, the model will not subtract the annual property tax/PILOT again in NOI. If it does not, tax/PILOT is treated as a separate expense below opex. Permanent debt is sized off restricted NOI, required DSCR, reserve requirements, and LIHTC lender/investor constraints.
Bond & Agency Guardrails
Leave 0 to use calculated senior debt as the bond amount.
Optional. Counsel should confirm the correct base for the 4% bond-financing test.
Use for working capital, marketing, escrows, operating deficit reserves, or other exclusions not separately modeled.
4% bond test assumption: the calculator uses anticipated tax-exempt bond amount divided by bond test base. If bond amount is left at 0, it uses calculated senior debt. If bond test base is left at 0, it uses acquisition price + rehab hard costs + soft costs + developer fee. The default required coverage is 50%. Counsel should confirm the correct numerator, denominator, timing, and whether bonds must remain outstanding for a minimum period.
Other Sources
Exit Valuation
Exit value is modeled at the sale/valuation year. The model treats tax benefit and affordability as separate clocks, then discounts the remaining cash-flow periods and terminal value from the buyer's perspective.