Treatment of Basic Housing Allowance for purposes of Income Eligibility Rules

Treatment of Basic Housing Allowance for purposes of Income Eligibility Rules


The Tax Act Passed last night once again excludes the military Basic Allowance for Housing (BAH) (37 U.S.C sec. 403) for purposes of tax credit and tax-exempt bond eligibility for qualified buildings. A qualified building is a building located:

Any county which contains a qualified military installation to which the number of members of the armed forces assigned to units based out of that installation has increased by 20% between 12/31/05 and 6/1/08; and any counties adjacent to such counties.

The base must have at least 1,000 members assigned to it.

Applicability: applies to income determinations made after July 30, 2008, and before January 1, 2014 if the project received a credit allocation before, on or after July 30, 2008, but before January 1, 2014.

For properties with bond related allocations, the buildings need to have been placed in service before, on or after July 30, 2008 but before January 1, 2014 (bonds must have been issued prior to January 1, 2014.)

Since the only thing changed in the legislation from the 2008 law is the date (January 1, 2012 was changed to January 1, 2014), only the nine areas identified in the original legislation are clearly eligible for this treatment. However, any installation that meets the definition outlined above will qualify for the exemption.


The nine areas listed in the legislation are:

  • U.S. Air Force Academy, Colorado;
  • Fort Shafter, Hawaii;
  • Fort Riley, KS;
  • Annapolis Naval Station, Maryland;
  • Fort Jackson, SC;
  • Fort Bliss, TX;
  • Fort Hood, TX;
  • Dam Neck, VA;
  • Naval Station Bremerton, WA; and
  • Fort Drum, NY


Owners and managers with properties in the counties (or cities) in which these bases are located (or adjacent counties or cities), may exclude the BAH from the calculation of income only for tax credit and tax-exempt bond purposes. The BAH will continue to count as income for all HUD and RD programs.


Please feel free to contact me with any questions.