The Section 42, Low Income Housing Tax Credit (LIHTC) is a tax credit created under the Tax Reform Act of 1986 that provides incentives for the utilization of private equity in the development of affordable housing aimed at low-income Americans.
The program was designed to give the private sector an incentive to invest in public housing. In order to attract the private sector, an investor receives a tax credit, which is determined by the qualified basis of the project, and losses from operation and depreciation.
The program is administered by state housing agencies that award the credits to projects within their jurisdiction based on project criteria. LIHTC investments are made through an upper-tier partnership which invests in numerous lower-tier (property) partnerships. The purpose of the structure is to protect the investor through both diversification and the isolation of property level problems.
For detailed information about low income housing tax-credit projects, please visit the HUD report of projects placed in service through 2005.
If you are interested in learning more about available affordable housing tax credit investment opportunities, please contact us.