Affordable housing finance
130% basis boost (DDA/QCT)
IRC § 42(d)(5)(B) counts eligible basis at 130% in HUD-designated DDAs and QCTs — or by state designation on 9% deals — up to 30% more credits.
Definition
For new construction and rehabilitation basis in a HUD-designated difficult development area or qualified census tract, IRC § 42(d)(5)(B) treats eligible basis as 130% of its actual amount — up to 30% more credits on the same costs (acquisition basis of an existing building never gets the boost). Since 2008, state agencies may also designate individual buildings as needing the boost for financial feasibility; that discretionary boost applies to allocated (9%) credits, not bond-financed deals, and the CTCAC regulations set when California grants it.
Why it matters in an underwrite
A 30% basis bump often decides feasibility outright — on a 4% deal it can add roughly a quarter more equity without adding a dollar of cost, which is why site searches get drawn around QCT boundaries. It is not automatic underwriting: HUD re-publishes DDA/QCT designations annually, with transition rules tied to application and allocation timing, so a site that slips out of designation between application and carryover can lose the boost the pro forma was built on.
Sources & related guides
See also
See the term in the law itself
Read the controlling text in the Code Library, or ask the AI how it applies to your project.
Last reviewed 2026-07-29. General information, not legal advice.