Low Income Housing Tax Credits
Created as part of the Tax Reform Act of 1986, and made permanent in 1993, the Low Income Housing Tax Credit (LIHTC) under Section 42 of the Internal Revenue Code is designed to help meet a growing need for affordable housing in the United States.
Under the LIHTC program, each state receives a specific tax credit per person residing in the state. Individual states determine how the credits are allocated, based on a plan adopted by a state's housing agency. Qualified new construction and substantial rehabilitation projects are eligible for either a 9 percent or 4 percent tax credit; based upon eligible project costs each year for 10 years.
The Low-Income Housing Tax Credit provides an incentive to developers for affordable rental housing. The credit provides a dollar-for-dollar federal tax liability reduction for owners of newly constructed or substantially rehabilitated rental housing.
As Idaho's designated Housing Tax Credit administrator, IHFA receives an annual Housing Tax Credit authority on behalf of the state. This annual credit authority is allocated through a competitive application process according to the Qualified Allocation Plan. Recipients of Housing Tax Credit allocations may claim the annual credit each year for 10 years. The housing sponsor has available 10 times the allocation amount, since investors can take the annual credit each year for a 10 year period. IRS requires that the project remain in compliance for a minimum of 15 years.
There are rent and income restrictions.
Contact Information
Idaho Housing Finance Association
http://www.ihfa.org/multifamily_taxcredit.asp
For more information, you can also contact Sean Gallagher at the HUD Financing and Development Office at (206) 220-5208.
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