how the low income housing tax credit works
the lihtc is intended to stimulate the creation of more affordable housing for low and middle income families the lihtc program provides the cost reducing tax credit in return for developers agreeing to reserve a certain percentage of rent restricted units for lower income families 4there are two main types of federal tax credits available to developers these credits are applied over a ten year period after a building is placed into service and can cover almost the entirety of the taxable expense for the building according to federal law the tax credits are allocated to each state by the federal government from there each state may choose the developers that can take advantage of these credits for their housing projects 7not every developer or investor will be able to take advantage of this program as there are more applications than available permits issued for construction the number of affordable housing units that the lihtc led to the creation of between 1987 and 2022 according to the latest data from the u s department of housing and urban development hud 8