First-Year Fraction vs. Minimum Set-Aside

The “first-year fraction” is the “applicable fraction” for the first year of the compliance period. The applicable fraction is the percentage of a building that’s treated as low-income use and generally eligible for the tax credits as of the close of that year of the compliance period. Once you’ve calculated your first-year fraction, you must maintain this figure as your applicable fraction for each year of the compliance period.