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tax credits - • Provided the property maintains...

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The LIHTC Program, which is based on Section 42 of the Internal Revenue Code , was enacted by Congress in 1986 to provide the private market with an incentive to invest in affordable rental housing. Federal housing tax credits are awarded to developers of qualified projects. Developers then sell these credits to investors to raise capital (or equity) for their projects, which reduces the debt that the developer would otherwise have to borrow. Because the debt is lower, a tax credit property can in turn offer lower, more affordable rents.
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Unformatted text preview: • Provided the property maintains compliance with the program requirements, investors receive a dollar-for-dollar credit against their Federal tax liability each year over a period of 10 years. The amount of the annual credit is based on the amount invested in the affordable housing. • A recognition of partial payment already made towards taxes due . • A state benefit paid to workers through the tax system, which has the effect of increasing (rather than reducing) net income ....
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