What are Affordable Housing Tax Credits?
Affordable Housing Tax Credits, also called Low Income Housing Tax Credits (LIHTC), are special tax incentives created by the Federal government to encourage the development of quality, affordable housing in locations where market rate rents have exceeded the level many individuals can afford – individuals like senior citizens and families with low to moderate incomes. They are authorized and administered by the Internal Revenue Service under IRS code section 42 under the 1986 Tax Act. According to the Office of Economic Affairs of the U.S. Department of Housing and Urban Development, the Federal housing tax credit program has provided 27,410 projects and over 1,530,000 housing units placed in service between 1987 and 2005. An average of almost 1400 projects and 100,000 units were placed in service each year under the 1995 – 2005 period. Nearly two-thirds of these are new construction, with most tax credits issued for developments in urban areas of the southern United States.
