Understanding LIHTC: A Complete Guide to Low-Income Housing Tax Credits

The Low-Income Housing Tax Credit (LIHTC) program is the most important resource for creating affordable housing in the United States today. Since its creation in 1986, the LIHTC program has helped finance nearly 3.5 million affordable rental homes for low-income households.

What is LIHTC?

The Low-Income Housing Tax Credit provides tax incentives to encourage private investment in affordable rental housing. Property owners receive tax credits in exchange for agreeing to rent apartments to low- and moderate-income tenants at restricted rents.

How Does LIHTC Work?

The Tax Credit Process

1. **State Allocation**: Each state receives an annual allocation of tax credits based on population
2. **Developer Application**: Developers apply to state housing finance agencies for credits
3. **Project Selection**: States award credits through a competitive process
4. **Construction/Rehabilitation**: Projects are built or renovated
5. **Compliance Period**: Properties must remain affordable for at least 30 years

Types of Tax Credits

There are two types of LIHTC:

• **9% Credit**: For new construction projects without federal subsidies
• **4% Credit**: For acquisition and rehabilitation projects or those with federal subsidies

Tenant Eligibility Requirements

To qualify for LIHTC housing, households must meet income requirements:

Income Limits

LIHTC properties typically serve households earning: - Up to 60% of Area Median Income (AMI) - Some units may be available at 50%, 40%, or even 30% AMI - Income limits vary by location and household size

Calculating Your Eligibility

Your eligibility depends on: 1. Household Size: Number of people in your household 2. Annual Income: Total household income from all sources 3. Area Median Income: The AMI for your specific location 4. Property Requirements: Specific income targets set by the property

Benefits of LIHTC Housing

For Tenants - **Affordable Rents**: Rents typically 20-40% below market rate - **Quality Housing**: Properties must meet health and safety standards - **Stable Housing**: Long-term affordability requirements protect tenants - **Good Locations**: Many properties near transit and services

For Communities - **Economic Development**: Creates jobs and stimulates local economies - **Neighborhood Revitalization**: Improves distressed areas - **Mixed-Income Communities**: Promotes economic diversity - **Increased Housing Supply**: Addresses affordable housing shortages

Finding LIHTC Properties

Search Strategies

1. **Online Databases**: Use our search tool to find properties in your area
2. **State HFA Websites**: Check your state's housing finance agency
3. **Local Housing Authorities**: Contact local public housing agencies
4. **Property Management Companies**: Many specialize in affordable housing

Application Process

Step 1: Find Properties Search for LIHTC properties that match your needs and location preferences.

Step 2: Check Eligibility Review income limits and household size requirements for each property.

Step 3: Gather Documentation - Proof of income (pay stubs, tax returns) - Photo ID for all adult household members - Social Security cards - Bank statements - References from previous landlords

Step 4: Submit Application Complete the application thoroughly and accurately. Include all required documentation.

Step 5: Wait for Processing Processing times vary. Some properties have waiting lists.

Step 6: Interview and Screening Be prepared for credit checks, background checks, and possibly an interview.

Important Tips

• **Apply Early**: Many properties have long waiting lists
• **Apply to Multiple Properties**: Increase your chances of finding housing
• **Keep Documentation Current**: Update your paperwork regularly
• **Understand Your Rights**: Learn about fair housing laws
• **Maintain Good Credit**: Work on improving your credit score
• **Be Honest**: Provide accurate information on all applications

Conclusion

The LIHTC program provides crucial affordable housing opportunities for millions of Americans. Understanding how the program works and knowing your eligibility can help you find quality, affordable housing in your community.

Use our search tools to find LIHTC properties in your area and start your application process today.