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Low-Income Housing Tax Credit

Program (?) Low-Income Housing Tax Credit
Abbreviation LIHTC
Program Description

The Low-Income Housing Tax Credit (LIHTC, pronounced “Ligh-TECK”) program provides a dollar-for-dollar reduction in federal income tax liability for investors in rental housing that serves very low-income and low-income households. LIHTC is administered by the Internal Revenue Service, which allocates tax credits to designated agencies based on a formula set by legislation. There are two types of LIHTCs: nine-percent credits and four-percent credits, which refer to the percentage of allowable development costs (eligible basis) that may be credited against the taxes of investors. Nine-percent credits are awarded to affordable housing developers on a competitive basis. Four-percent credits are provided as-of-right when a project is financed with tax-exempt bonds. Tax credits are further allocated based on criteria specified in the jurisdiction’s Qualified Allocation Plan. Once awarded Low-Income Housing Tax Credits, the developer is able to syndicate (or sell) tax credits to corporate investors to raise equity that is used towards the construction of the project. Tax credit investors receive a reduction in corporate federal income taxes for ten years; as a result, they usually make payments over time and these payments are capitalized by a bridge loan that represents the investor equity expected from the tax credits. Thus, the result of a tax credit investment is usually a significant percentage of equity in the project development that reduces the remaining development costs that require financing.

Although HCR is the main allocating agency of tax credits in New York State and supports projects in New York City, it sub-allocates LIHTCs to HPD to administer the program in New York City. During annual funding rounds, developers apply competitively to HPD for allocations of tax credits.

Benefit Classification (?)  
Supply or Demand Supply
One-Time or Ongoing One-Time
Benefit Type (?) Financing, Grant, Property Tax Incentive
Government Agency (?) US Internal Revenue Service
Program Information (?)  
Scale Very Large Scale (over 10,000 units produced)
Timeframe 1986-Present
Developer/Owners (?) For-Profit, Non-Profit
Property Information (?)  
Property Occupancy Occupied, Vacant
Property Type Land, Building
Building Type Multi-family
Construction Type Rehabilitation, New Construction
Occupant Tenure (?) Rental
Occupant Income Restrictions (?) Very Low-Income, Low-Income
Other Targeting Information (?)

At least 20 percent of units must be reserved for households with income 50 percent below AMI or 40 percent of units must be reserved for households with lower than 50 percent AMI

More Information NYC HPD
Available on CoreData.nyc? Yes
Last Updated December 2016
Data Source U.S. Department of Housing and Urban Development
CoreData.nyc Notes

LIHTC data only includes the subsidy start date. We estimate the end date of a LIHTC subsidy to be 30 years from the start date. Data from U.S. Department of Housing and Urban Development accessed May 2016.

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