The Low-Income Housing Tax Credit Program

The largest federal housing program is not one run by the Department of Housing and Urban Development, but rather the Internal Revenue Service. The Low Income Housing Tax Credit Program (LIHTC) provides tax incentives, written into the Internal Revenue Code, for developers to create affordable housing. The tax credits are provided to each state on a per-capita basis. Each state is then left to manage the program, with some broad outlines of program requirements from the federal government. Thus, each state has a designated state agency responsible for federal tax credit allocation and has adopted a Qualified Allocation Plan (QAP) to describe the priorities and standards for the awards.

On their own, tax credit subsidies provide a moderate level of affordability through rent restrictions; however, many units or tenancies are subsidized through additional sources of federal or state funding, which allows for deeper affordability to lower-income families.

A number of issues may arise in relation to the LIHTC program, including fair housing violations, unfairness in the admissions process, poor living conditions and management practices, improper evictions, financing problems, and continued affordability issues. This resource area will focus in on a few key issues that advocates face frequently. These include:

• Preservation of affordability of LIHTC buildings
• The Qualified Allocation Planning process
• The requirement of good cause for eviction
• Fair housing

Overview of LIHTC Program