Community Development Minute: Low-Income Housing Tax Credits

Nov 12, 2019

Although there is a shortage of affordable rental housing in the United States, the low-income housing tax credit is one way the federal government tries to address the shortage. Do you know how it works?

The low-income housing tax credit was enacted as part of the 1986 Tax Reform Act. The federal government issues tax credits to state governments. State housing agencies award these credits to private developers, who usually sell the credits to private investors to obtain funding. W ith lower financing costs, tax credit properties can offer lower, more affordable rents. Once the housing project is built, investors can claim the tax credit over a ten-year period.

Low-income housing tax credit tenants must have incomes that do not exceed limits determined by federal law. Since its inception, the program has supported the construction or rehabilitation of around 2 million rental housing units across the country.

You can learn more about programs like the low-income housing tax credit at UDDCLittleRock.org.