Housing Tax Credits
Forecasted
Housing Tax Credits support developers in building, rehabilitating, and preserving affordable housing, attracting private investment to meet the needs of low-income households across South Dakota.
Funder: South Dakota Housing Development Authority
Due Dates (Anticipated): July 2027 (Utility calculation requests) | August 2027 (Annual applications)
Funding Amounts: $4.2 million available; $840,000 per project; credits claimed over 10 taxable years
Summary: Tax credits attract private investment in constructing and preserving affordable housing for low-income households across South Dakota.
Key Information: Projects must contain at least 16 units and maintain low-income occupancy restrictions for at least 30 years.
Description
South Dakota Housing Development Authority (SDHDA), operating as SD Housing, administers the Low Income Housing Tax Credit program statewide. Created by the Internal Revenue Code of 1986, the program reduces owners’ tax liability to encourage construction, rehabilitation, and preservation of decent, safe, sanitary, affordable housing in areas of greatest housing need.
Developers typically raise project equity by syndicating credits to investors, whose returns include annual tax credits and other project benefits. Depending on project type, credits correspond to approximately 4% or 9% of qualified costs attributable to low-income units. SDHDA competitively reserves and allocates credits under its Qualified Allocation Plan (QAP), with dedicated nonprofit and rural/tribal set-asides. Projects carry rent, income, and long-term affordability restrictions.
