Rent Up to Minimum Set-Aside

An owner can claim only the credits allocated to him by his state housing credit agency. Suppose an owner is in the process of leasing up a brand-new 80 percent tax credit building and the marketing department brings in nine qualified low-income households. Eight of the 10 units must be rented to qualified households.

In this example, renting to all nine applicants wouldn't be wise from a business standpoint. There wouldn't be additional credits claimed for the ninth unit and the owner would lose out on the difference between market and restricted rent if the ninth unit was rented to a qualified low-income household.