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What is LIHTC?

LIHTC 101

The Low-Income Housing Tax Credit (LIHTC) program is the largest source of new affordable housing in the United States. This LIHTC 101 page is designed to help people new to LIHTC to understand the key players and the basic structure of an LIHTC transaction.

The Basic Structure of a Low-Income Housing Tax Credit Deal

1
IRS allocates tax credits to each state based on population.
2
State allocating agency adopts a Qualified Allocation Plan (QAP) which reflects the state’s priorities for housing development.
3
Developers submit proposals to the allocating agency.
4
Allocating agency awards tax credits to some developers, in accordance with priorities set in the QAP.
5
Investors purchase a share in the development, providing the equity needed to fund the project.
6
Developer builds and operates the housing.
7
The developer submits compliance reports to the allocating agency.
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