Low-Income Housing Tax Credit Program

The federal Low-Income Housing Tax Credit (LIHTC) Program was established by the Tax Reform Act of 1986 (Internal Revenue Code Section 42) to create market incentives for the acquisition and development or rehabilitation of affordable rental housing. The equity capital generated from the tax credits lowers the debt burden on LIHTC properties, making it easier for owners to offer lower, more affordable rents; while investors, such as banks, obtain a dollar-for-dollar reduction in their federal tax liability. Over the past twenty-five years, this program has become an important tool for addressing the nation's affordable housing needs.

The Internal Revenue Service is the federal agency responsible for administering the LIHTC program.  LIHTCs are distributed to State Housing Finance Agencies on an annual basis.  The state HFAs then allocate the credits to qualified affordable housing development projects on a competitive basis.  HUD collects overview data on LIHTC projects, and provides resources for using the program to develop affordable rental housing.

OCC Resources

"Low-Income Housing Tax Credits: Affordable Housing Investment Opportunities for Banks," (PDF) Community Development Insights, February 2008. This edition of Community Developments Insights describes how LIHTCs are used to develop affordable rental housing and how banks can benefit from investing in LIHTC-financed projects. It describes the two approaches for investing in LIHTCs: direct investments in individual affordable housing projects and fund investments that have multiple projects managed by third parties. The report outlines risks and regulatory considerations of LIHTC investments and describes how these investments would be considered under the Community Reinvestment Act (CRA).

"Low-Income Housing Tax Credits," (PDF) Community Developments Fact Sheet.

"Low-Income Housing Tax Credit Funds: Investment Opportunities for Banks," OCC Web and Telephone Seminar, Executive Summary, September 10, 2008.

• Executive Summary (PDF)
• Handouts (PDF)

"Investing in Low-Income Housing Tax Credits: A Sound Opportunity for Community Banks," Community Developments Investments, Spring 2006.

Federal Resources

Internal Revenue Service

Internal Revenue Code, Section 42 Low-Income Housing Credit.

"IRS Resources About Tax Exempt Bonds," Internal Revenue Service, U. S. Department of the Treasury.

State Housing Finance Agencies 

National Council of State Housing Agencies (NCSHA) - NCSHA was created by the nation's state Housing Finance Agencies (HFAs) as a nonprofit affordable housing advocacy organization that represents state HFAs, the District of Columbia, Puerto Rico and the Virgin Islands, two (non-HFA) state agencies that allocate LIHTCs, and for profit and nonprofit firms in the affordable housing field.  The website also has a directory of state housing finance agencies.

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

"LIHTC Basics," Community Planning & Development, U.S. Department of Housing and Urban Development. A good summary of the LIHTC program.

"Low-Income Housing Tax Credits," HUD User, U.S. Department of Housing and Urban Development. A searchable dataset of all of the LIHTC projects placed into service.

Industry Organizations and Professional Associations

Novogradac Affordable Housing Resource Center - News, facts and figures, federal and state guidance, research and reports, and other resources on the LIHTC program.

The Reznick Group has an August 2011 report entitled The Low Income Housing Tax Credit Program at Year 25: A Current Look at Its Performance that looks at how LIHTC properties have performed in 2008 – 2010.

Affordable Housing Tax Credit Coalition - The Affordable Housing Tax Credit Coalition is a group of developers, syndicators, lenders, nonprofit groups, public agencies, and others concerned with the low-income housing tax credit.

Affordable Housing Investors Council (AHIC) - AHIC provides information about the benefits of investing in affordable housing tax credit properties, educates corporate investors on all aspects of affordable housing, and discusses issues of importance to investors in the industry.

National Association of Local Housing Finance Agencies (NALHFA) - NALHFA is a national association of professionals, including city and county agencies, non-profit organizations, underwriters, consultants, financial advisors, bond counsels, and rating agencies, who help finance affordable housing in the broader community development context at the local level.

National Association of State and Local Equity Funds (NASLEF) - NASLEF promotes the efficient management of state and local equity funds to create or rehabilitate affordable rental housing throughout the United States.

National Housing & Rehabilitation Association (NH&RA) - The National Housing & Rehabilitation Association (NH&RA) is an association for professions in the historic rehabilitation, affordable housing, new markets, and renewable energy tax credit programs. In addition, the association produces two publications for organizations interested in financing tax credit projects.

• Tax Credit Advisor
• Housing OnLine Weekly

National Not-For-Profit Syndicators and TA Providers

National Equity Fund (NEF) - NEF, an affiliate of the Local Initiatives Support Corporation (LISC), was created as LISC's tax-credit syndication arm in 1987 to help deliver additional capital to Community Development Corporations (CDCs) focused on affordable housing development.