Section 42 Lihtc Program

The low income housing tax credit lihtc program was created in 1986 and is the largest source of new affordable housing in the united states.

Section 42 lihtc program.

For purposes of this section in the case of any project for residential rental property located in a rural area as defined in section 520 of the housing act of 1949 any income limitation measured by reference to area median gross income shall be measured by reference to the greater of area median gross income or national non metropolitan median income. Section 42 falls under subsidized apartments which simply means decent housing can be made affordable to those who fall in a certain income range. It was created under the tax reform act of 1986 tra86 and gives incentives for the utilization of private equity in the development of affordable housing aimed at low income americans. The purpose of the program is to provide a tax credit to property owners developers to create affordable rental housing.

The low income housing tax credit lihtc program helps create affordable apartment communities with lower than market rents by offering tax incentives to the property owners not the tenant renting the unit. Section 42 of the internal revenue service s tax code also known as the low income housing tax credit exists to serve high need. The low income housing tax credit lihtc often pronounced lie tech housing credit is a dollar for dollar tax credit in the united states for affordable housing investments. Properties may contain market rate units that are not financially assisted in addition to reduced rent lihtc units under a tiered rent structure.

Nevada housing division administers the low income housing tax credit lihtc program and is required as the state s housing credit agency to adopt a plan describing the process for the allocation of housing credits. As a condition for receiving housing tax credits owners must keep the units affordable for a specified number of years. In exchange for the tax credit the property owner must agree to. Federal rental assistance programs help about 5 million households with low comes to affordably rent modest housing.

Tenant qualifications for section 42 tax credit programs. Section 42 of the internal revenue code irc or the code is the federal statute establishing the tax credit program. The irc 42 low income housing credit program was enacted by congress as part of the tax reform act of 1986 to encourage new construction and rehabilitation of existing buildings as low income rental housing for households with income at or below specified income levels. The preceding sentence shall not apply with respect to any building if paragraph 1 of section 42 h does not apply by reason of.

The program regulations are under section 42 of the internal revenue code. There are about 2 000 000 tax credit units today and this number continues to grow by an estimated 100 000 annually. Section 42 is also known as a housing tax credit program or low income housing.