Passing the LIHTC 10% Carryover Test On Time

August 1, 2025

The 10% carryover test protects your credits: LIHTC state agencies require at least 10% of reasonably expected basis to be incurred within about 12 months of award. Miss it, and credits can be at risk.


What counts toward 10%
Land, land improvements, design fees, pre-development, environmental and geotech, and early construction activity typically count. Your CPA will verify the totals against contracts, invoices, and proof of payment.


A practical timeline

  • Month 0–2: Confirm allocation date and expected basis
  • Month 2–6: Track eligible costs weekly; keep a dedicated folder
  • Month 6–10: CPA pre-review of ledgers and invoices
  • Month 10–11: Finalize testing; obtain missing documentation
  • Month 12: Issue report and submit the package to the state agency


Avoid these pitfalls
Waiting to engage your auditor; fuzzy scopes for soft costs; and incomplete pay evidence. Build a single spreadsheet that lists invoices, dates, vendor, purpose, and eligible vs. ineligible status—updated in real time.


New allocation? Set your carryover timeline now and leave room for review before the deadline.

Newer Post >