LIHTC: 9% Credits vs 4% Credits

The Section 42 federal low income housing tax credit (LIHTC) program includes two different development funding tracks: (a) competitive tax credits and (b) tax credits available through tax-exempt bonds (also known as private activity bonds.) There are three kinds of federal tax credits: 9% credits (aka 70% present value credits) for the new construction and rehabilitation of competitive tax credit projects 4% credits (aka 30% present value credits) for the acquisition of existing buildings…

Understanding the LIHTC (Low Income Housing Tax Credit)

Introducing the LIHTC The Section 42 Low Income Housing Tax Credit (LIHTC) program is a federal tax incentive that encourages private sector investors, developers and lenders to finance, construct and operate affordable housing. Since the program’s founding in 1986, LIHTC tax credits have been allocated for the construction and rehabilitation of more than three million housing units. About one of every six units of new rental housing built in the…

LIHTC Applicable Federal Rate (AFR) Update

The Applicable Federal Rate (AFR) is used as the Low Income Housing Tax Credit (LIHTC) “Applicable Percentage” that determines the eligible basis of tax credit properties. The AFR is reported monthly by the Internal Revenue Service for both the 9% and 4% tax credits. AFR’s for Section 42 tax credit properties since the year 2000 are listed below. (Please note the comments below re: legislative changes to the 9% and…