Section 42 Lihtc Tax Credit Program

As part of the tax reform act of 1986 the united states congress created the low income housing tax credit lihtc irc section 42 program to promote the development of affordable rental housing for low income individuals and families.

Section 42 lihtc tax credit program.

It particularly benefits low income residents of high rent high income locales like. The tax credit reform act of 1986 created the low income housing tax credit program lihtc. There are about 2 000 000 tax credit units today and this number continues to grow by an estimated 100 000 annually. 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.

You may see an lihtc credit called a section 42 tax credit because it s based on section 42 of the federal tax law. 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 program regulations are under section 42 of the internal revenue code. Section 42 of the internal revenue code irc or the code is the federal statute establishing the tax credit program.

Section 42 the low income housing tax credit is one of the federal government s low cost housing programs. 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. The program administered in virginia by virginia housing encourages the development of affordable rental housing by providing owners a federal income tax credit. The federal low income housing tax credit lihtc program is sponsored by the u s.

As a condition for receiving housing tax credits owners must keep the units. The program is administered by the internal revenue service irs. According to the urban institute the process for allocating tax credits competitively is guided by federal regulation uses federal dollars and is controlled by states. 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.