A Vital Lifeline for the Production of Affordable Housing
The Low-Income Housing Tax Credit (LIHTC) plays a critical role in the housing market by ensuring a supply of attainable rental housing. Created as part of the 1986 tax reform legislation, the LIHTC has been responsible for financing the development or preservation of more than 3.2 million rental homes. The housing credit also has been a success story in terms of generating jobs and economic impact for communities.
However, the primary beneficiaries of the program have been the residents of the housing developed under the program. New NAHB analysis that focuses on the demographics of LIHTC housing reveals that approximately 8 million low-income households, or 18.7 million people, have benefitted from the program and reside in homes financed by the LIHTC as of 2018. This is a significant total and illustrates the important role the housing credit has played in terms of providing high quality, affordable rental housing.
As the most successful affordable rental housing production program in U.S. history, the LIHTC provides federal tax credits to developers for building income-restricted housing: Those individuals or corporations receive a dollar-for-dollar tax credit which provides the motivation and facilitates the development of low-income housing.
Those tax credits provide the project with additional equity during the construction phase, which helps to make it less expensive to build and maintain an affordable apartment complex.