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Question 1

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Under what section of the Internal Revenue Code is the Low-Income Housing Tax Credit (LIHTC) program authorized?

IRC §8

IRC §42

IRC §142

IRC §1031

to track

2026 Statistics

Key Facts: SHCM Exam

100

Practice Questions

OpenExamPrep SHCM bank (NAHMA-aligned)

3 hr

Total Exam Time

Approved SHCM training-and-exam administration

70%

Passing Score

NAHMA SHCM credential

30 yr

Total Compliance

IRC Section 42(h)(6): 15-year Compliance + 15-year Extended Use

$50,000

HOTMA Asset Threshold

Housing Opportunity Through Modernization Act of 2016

~$650-$850

2026 Training + Exam Fee

NAHMA AHMA affiliates / private trainers — verify schedule

The SHCM is a 100-question, 3-hour LIHTC compliance exam administered by NAHMA-approved AHMA affiliates and private trainers, with a 70% passing score. Content spans LIHTC fundamentals (20%), tenant eligibility and income certification (25%), rent and utility allowance (15%), recordkeeping and Form 8823 (15%), compliance and extended-use period (10%), annual compliance and state HFA monitoring (10%), and special issues including acq/rehab, RAD, and Fair Housing (5%). Combined training-plus-exam cost is approximately $650-$850. Two or more years of tax-credit property management experience is recommended.

Sample SHCM Practice Questions

Try these sample questions to test your SHCM exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1Under what section of the Internal Revenue Code is the Low-Income Housing Tax Credit (LIHTC) program authorized?

A.IRC §8

B.IRC §42

C.IRC §142

D.IRC §1031

Explanation: The Low-Income Housing Tax Credit was created by the Tax Reform Act of 1986 and is codified at Internal Revenue Code §42. SHCM candidates must know §42 is the controlling federal statute — Treasury Regulation 1.42 and IRS guidance interpret it.

2Which federal agency is the primary regulator of LIHTC compliance at the federal level?

A.U.S. Department of Housing and Urban Development (HUD)

B.Internal Revenue Service (IRS)

C.Federal Housing Finance Agency (FHFA)

D.Department of the Treasury, Office of the Comptroller

Explanation: Because LIHTC is a tax credit, the IRS is the primary federal regulator — including the Form 8823 noncompliance process and recapture. HUD publishes the income/rent limits used by the program but does not enforce LIHTC compliance.

3Which entity receives the federal LIHTC ceiling each year and allocates credits to specific projects within a state?

A.The IRS regional office

B.The state Housing Finance Agency (HFA), also called the allocating agency

C.HUD field office

D.The U.S. Treasury directly

Explanation: Each state's Housing Finance Agency (HFA) receives an annual per-capita federal credit ceiling and allocates it to projects based on its Qualified Allocation Plan (QAP). The HFA is also the state monitoring agency for compliance.

4What document does each state HFA use to set scoring criteria, set-asides, and priorities for awarding LIHTC?

A.Notice of Funding Availability (NOFA)

B.Qualified Allocation Plan (QAP)

C.Consolidated Plan

D.Annual Action Plan

Explanation: The Qualified Allocation Plan (QAP) is the public document each state HFA must adopt under §42(m) to govern how credits are allocated. It defines selection criteria, set-asides (rural, supportive housing, etc.), and threshold requirements.

5Which credit rate generally applies to NEW CONSTRUCTION or substantial rehabilitation of LIHTC projects that are NOT financed with tax-exempt bonds?

A.4% credit

B.9% credit

C.1% credit

D.30% credit

Explanation: The 9% credit (a 70% present-value credit) generally applies to new construction and substantial rehab not financed with tax-exempt bonds. The 4% credit (30% present-value) applies to acquisition costs and to projects financed with tax-exempt private activity bonds.

6A project finances more than 50% of aggregate basis with tax-exempt private activity bonds. Which credit rate applies, and does the project still need a competitive credit award from the HFA?

A.9% credit; competitive award required

B.4% credit; no competitive credit allocation required (credits are 'as-of-right')

C.9% credit; no competitive award required

D.4% credit; competitive award required

Explanation: Projects financed with more than 50% tax-exempt bonds qualify for the 4% credit on an as-of-right (non-competitive) basis — the bond cap, not the LIHTC cap, is the binding constraint. The HFA still issues a determination letter under §42(m), but the credits do not come from the per-capita ceiling.

7The annual federal LIHTC a project receives is calculated as:

A.Eligible basis × applicable fraction × applicable credit percentage

B.Total development cost × 9%

C.Tenant rent × 12 × 10

D.Land cost × applicable fraction

Explanation: Annual credit = qualified basis × applicable percentage, where qualified basis = eligible basis × applicable fraction. Eligible basis is generally depreciable construction/rehab cost (excluding land). The credit is taken annually for 10 years.

8The 'applicable fraction' under §42 is the LESSER of which two fractions?

A.Unit fraction (low-income units / total residential units) and floor space fraction (low-income floor space / total residential floor space)

B.Income fraction and rent fraction

C.Eligible basis fraction and qualified basis fraction

D.Vacancy fraction and occupancy fraction

Explanation: Applicable fraction = LESSER of the unit fraction or the floor space fraction. Both are computed building by building. Failing to qualify a unit reduces qualified basis and the annual credit — and may trigger 8823.

9Over how many years is the federal LIHTC actually CLAIMED by investors?

A.5 years

B.10 years

C.15 years

D.30 years

Explanation: The credit is claimed over a 10-year credit period, beginning when the building is placed in service (or the year after, by election). The compliance period, however, is 15 years, and the extended use period adds at least another 15.

10Which of the following is NOT included in eligible basis for LIHTC?

A.Construction hard costs

B.Architect and engineering fees

C.The cost of land

D.Construction-period interest

Explanation: Land is NOT depreciable and is excluded from eligible basis. Eligible basis is generally the depreciable cost of the residential rental property — hard costs, soft costs (A&E, legal, financing fees within limits), and construction-period interest are includable; commercial/non-residential portions are not.

About the SHCM Exam

The Specialist in Housing Credit Management (SHCM) is the premier industry credential for property managers operating Low-Income Housing Tax Credit (LIHTC, IRC Section 42) communities. Awarded by NAHMA (National Affordable Housing Management Association), the credential validates expertise across IRC Section 42 fundamentals (9% versus 4% credits, QAP and state HFA allocation, applicable percentage, eligible and qualified basis, minimum set-asides including the 2018 Income Averaging 20-80% AMI election), the 15-year Compliance Period plus 15-year Extended Use Period, tenant eligibility and income certification (HUD income limits, AMI bands, Tenant Income Certification (TIC), Rule of 5, third-party verification, HOTMA 2016 net family asset rules), rent and utility allowance (30% imputed-income gross rent, permitted UA methods), recordkeeping and Form 8823 noncompliance categories with the 90-day correction period, annual compliance and state HFA monitoring (Available Unit/140% Rule, Vacant Unit Rule, 20% file review every 3 years), and special issues (acquisition/rehabilitation placed-in-service, RAD overlay, Fair Housing, NAHMA ethics). Training and the exam are delivered through regional and state AHMAs and approved private trainers.

Questions

100 scored questions

Time Limit

3 hours

Passing Score

70%

Exam Fee

$650-850 (NAHMA)

SHCM Exam Content Outline

20%

LIHTC Fundamentals

Internal Revenue Code Section 42 framework — 9% credit (new construction or substantial rehab) versus 4% credit (acquisition or tax-exempt bond financing); credit allocation through Qualified Allocation Plans (QAPs) administered by state Housing Finance Agencies (HFAs); applicable percentage and applicable fraction; eligible basis and qualified basis; minimum set-aside elections (20-50, 40-60, and the 2018 Income Averaging 20-80% AMI averaged at 60%); placed-in-service rules; the 10-year credit period; and the 15-year initial Compliance Period.

25%

Tenant Eligibility & Income Certification

HUD Section 8 income limits applied annually (50%, 60%, and Income-Averaging 20-80% AMI bands); Tenant Income Certification (TIC) at move-in and annually thereafter; Rule of 5 anticipated income calculation; third-party verification hierarchy; asset income calculation under HOTMA 2016 (net family asset threshold of $50,000 — actual income from assets used; otherwise greater of actual or HUD passbook savings rate); the full-time student rule with five exclusions (married filing jointly, single parent with dependent, foster care, TANF, job training program, formerly homeless); Section 8 voucher residents auto-qualified; over-income existing tenants and continued eligibility.

15%

Rent & Utility Allowance

Maximum gross rent limit calculation: 30% of imputed AMI income for the unit's bedroom size at the elected set-aside, minus the utility allowance; imputed household occupancy of 1.5 persons per bedroom; five permitted utility allowance methods (PHA-published, local utility company estimate, energy consumption model, HUD Utility Schedule Model, agency-approved alternative); annual UA review and update; effective dates of UA changes; differences between LIHTC rent limits and Section 8 contract rents.

15%

Recordkeeping & Form 8823

IRS Form 8823 Low-Income Housing Credit Agencies Report of Noncompliance (or Building Disposition); Form 8823 Audit Guide categories of noncompliance (income noncompliance, rent noncompliance, casualty loss, transferred building, unsuitable units, owner failure to certify, and others); state HFA reporting timelines; 90-day correction period (extendable to 6 months by the agency); tenant file retention (longest of 6 years after the return for the year, or through the credit period plus 21 years); auditing and physical-inspection record requirements.

10%

Compliance & Extended Use Period

15-year initial Compliance Period plus 15-year Extended Use Period (30 years total) under IRC Section 42(h)(6); Land Use Restrictive Agreement (LURA) or Extended Use Agreement; three-year vacancy decontrol period for existing low-income tenants after extended-use; qualified contract process; recapture risk on credits previously claimed; bond posting; and Section 42(g)(2) ongoing low-income occupancy requirements.

10%

Annual Compliance & State HFA Monitoring

Owner annual certification to the state HFA; HFA monitoring procedures (file review and physical inspection of at least 20% of low-income units at least once every three years); Available Unit Rule (next available unit of comparable size must be rented to a qualified household when an existing tenant exceeds 140% of the income limit); Vacant Unit Rule (reasonable attempts to rent vacant low-income units before any market-rate move-ins); unit-transfer rules between buildings within the same project.

Special Issues

Acquisition/rehabilitation placed-in-service rules and the 10% test; RAD (Rental Assistance Demonstration) overlay where Section 8 PBRA or PBV combines with LIHTC; Section 504/UFAS/ADA accessibility; Fair Housing Act seven protected classes (race, color, national origin, religion, sex, familial status, disability); NAHMA Code of Professional Ethics; and special considerations for student housing, mixed-income, and rural development properties.

How to Pass the SHCM Exam

What You Need to Know

Passing score: 70%
Exam length: 100 questions
Time limit: 3 hours
Exam fee: $650-850

Keys to Passing

Complete 500+ practice questions
Score 80%+ consistently before scheduling
Focus on highest-weighted sections
Use our AI tutor for tough concepts

SHCM Study Tips from Top Performers

1Memorize the two LIHTC credit rates and what triggers each: 9% credit (technically the 70% present-value credit) for new construction or substantial rehabilitation NOT financed with tax-exempt bonds; 4% credit (the 30% present-value credit) for acquisition costs of an existing building OR for projects financed 50% or more with tax-exempt bonds. The state HFA allocates 9% credits competitively through its QAP (Qualified Allocation Plan); 4% credits are non-competitive when paired with bond authority. Credits are claimed annually for 10 years, but compliance runs for 15 years (Compliance Period) plus 15 more years (Extended Use Period) under IRC Section 42(h)(6) — 30 years total.

2Three set-aside elections to memorize: (1) 20-50 — at least 20% of units at 50% AMI; (2) 40-60 — at least 40% of units at 60% AMI; (3) Income Averaging (added by the 2018 Consolidated Appropriations Act) — at least 40% of units serve households whose designated income limits average no more than 60% AMI, with individual designations between 20% and 80% AMI in 10% increments. Income Averaging is irrevocable once elected and only applies to projects placed in service after March 23, 2018.

3Tenant Income Certification (TIC) math you must master: anticipated annual income uses the Rule of 5 — count gross income from each source for the next 12 months. Asset income under HOTMA: if net family assets are $50,000 or less, the property may accept the family's self-certification of asset income; if assets exceed $50,000, count the GREATER of actual income from assets OR an imputed amount equal to total net assets multiplied by the HUD passbook savings rate (currently 0.40% but always verify). Re-certify annually at LIHTC-only properties; HOTMA also allows 100% LIHTC properties (without RD or HUD layered subsidy) to forgo full annual recertification with the state HFA's permission, but tenants still self-certify income and student status annually.

4The full-time student rule under IRC Section 42(i)(3)(D): a unit is NOT a low-income unit if 100% of occupants are full-time students UNLESS at least one of these five exceptions applies — (1) at least one occupant is married and filing a joint federal return; (2) at least one occupant is a single parent with a dependent child (and neither the parent nor the child can be claimed as a dependent by a third party other than the other parent); (3) at least one occupant was previously in foster care; (4) at least one occupant receives or has received TANF assistance; (5) at least one occupant is enrolled in a federal/state/local job training program. Note: the formerly homeless exception applies under HOTMA-related student rules — verify against current NAHMA materials.

5Available Unit Rule and 140% rule: when an existing low-income tenant's income at recertification exceeds 140% of the current income limit (170% in deep-rent-skewed projects), the unit remains a low-income unit BUT the next available unit of comparable or smaller size in the same building must be rented to a qualified low-income household at or below the income limit. If management rents that next available unit to a market-rate tenant first, the over-income unit is treated as out of compliance retroactively. Vacant Unit Rule: reasonable attempts must be made to rent any vacant low-income unit to a qualified household before renting any market-rate unit in the same building.

Frequently Asked Questions

What is the SHCM (Specialist in Housing Credit Management) credential?

The SHCM is the premier industry credential for property managers operating Low-Income Housing Tax Credit (LIHTC, IRC Section 42) communities. It is awarded by NAHMA (National Affordable Housing Management Association) and validates compliance expertise across LIHTC fundamentals, tenant eligibility and income certification, rent and utility allowances, Form 8823 noncompliance reporting, and state HFA monitoring. Training and the exam are delivered through regional and state AHMAs and NAHMA-approved private trainers.

Who should pursue the SHCM credential?

The SHCM is intended for property managers, compliance specialists, asset managers, and regional supervisors who operate LIHTC properties. NAHMA recommends two or more years of tax-credit property management experience before sitting the exam. The credential is also widely valued by owners, syndicators, and state HFAs as proof of compliance competency.

What is the format of the SHCM exam?

The SHCM exam is approximately 100 multiple-choice questions delivered over a 3-hour window. The passing score is 70%. The exam is administered after completion of an approved SHCM training course offered through regional or state AHMAs (Affordable Housing Management Associations) or NAHMA-recognized private trainers, either online proctored or in person.

How much does the SHCM cost in 2026?

The SHCM training-plus-exam typically costs approximately $650 to $850, with pricing dependent on the AHMA affiliate or private trainer offering the course and on member versus non-member status. Always verify the current schedule with NAHMA or the training provider you select. Annual recertification dues and continuing education credits apply for ongoing certification maintenance.

What are the highest-yield topics?

The highest-yield topics are tenant eligibility and income certification (25%) — TIC, Rule of 5, third-party verification, HOTMA $50,000 net family asset rule, and the full-time student rule with its five exclusions; LIHTC fundamentals (20%) — IRC Section 42, 9% vs 4% credits, QAP/HFA allocation, the 2018 Income Averaging set-aside; rent and utility allowance (15%) — 30% of imputed AMI income minus UA, 1.5 persons per bedroom, permitted UA methods; and Form 8823 (15%) — categories of noncompliance and the 90-day correction period.

How should I study for the SHCM exam?

Start with the IRC Section 42 framework (9% versus 4% credits, QAP, HFA, applicable percentage, eligible and qualified basis, set-asides including 2018 Income Averaging) and the 15-year Compliance Period plus 15-year Extended Use Period. Then drill tenant eligibility and income certification (TIC, Rule of 5, third-party verification, HOTMA asset rules, the student rule and its five exclusions). Master rent and utility allowance math (30% of imputed AMI income minus UA). Memorize Form 8823 categories and the 90-day correction period. Plan 60-100 hours over three to six months and take 2-3 timed full-length mock exams.