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Category: Tax Credits

Low-Income Housing Tax Credits (LIHTC) represent the federal government’s primary tax expenditure program under IRC Section 42, granting dollar-for-dollar tax offsets to developers to syndicate equity and finance the construction of rent-restricted multi-family housing communities.

Tax Credit Pillars 4% vs. 9% Credits LIHTC Directory Tax Credit FAQs

Core LIHTC Guides & Blueprints

Program Mechanics

How Does the LIHTC Program Work?

Explaining credit allocations, syndication pricing, compliance periods, and long-term affordability covenants.

Tenant Qualification

Qualifying for LIHTC Apartments Online

How to locate tax credit properties, verify building AMI restrictions, and complete on-site applications.

Investor Guide

Investing in Housing for Tax Benefits

Tax syndication equity models, depreciation benefits, and Community Reinvestment Act (CRA) compliance.

The Statutory Structure: 9% Competitive vs. 4% Non-Competitive Credits

State Housing Finance Agencies allocate LIHTC credits annually based on a Qualified Allocation Plan (QAP). The program is bifurcated into two primary credit streams: the 9% competitive credit (which subsidizes roughly 70% of eligible development basis) and the 4% non-competitive credit (which subsidizes approximately 30% and is paired with tax-exempt private activity bonds).

To receive credits, developers must commit to one of three statutory minimum set-aside rules: the 20/50 test (at least 20% of units rent-restricted to families earning $le 50%$ AMI), the 40/60 test (at least 40% of units restricted to $le 60%$ AMI), or the Average Income test (at least 40% of units averaging $le 60%$ AMI, with tiers ranging from 20% to 80% AMI).

Credit TrancheEquity Subsidy BasisAllocation ProcessTypical Project Fit
9% LIHTC Credit~70% of eligible construction basisHighly competitive annual state QAP scoreNet-new construction, high-subsidy infill
4% LIHTC Credit~30% of eligible construction basisNon-competitive (requires Private Activity Bonds)Substantial rehabilitation, large multi-family preservation

LIHTC Knowledge Directory

Tenant Guides

Investor & Fast-Track Info

Frequently Asked Questions

Can I use a Section 8 voucher in a LIHTC building?

Yes. Under federal law (26 U.S.C. § 42(h)(6)(B)(iv)), LIHTC property owners are strictly prohibited from refusing to lease to a prospective tenant solely because the applicant holds a Section 8 Housing Choice Voucher.

How long must a LIHTC property remain affordable?

Federal law mandates an initial 15-year compliance period followed by an additional 15-year Extended Use Period, guaranteeing a minimum of 30 years of income and rent restrictions. Many states incentivize extended covenants lasting 45 to 50 years.

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