Lihtc Section 42

The lihtc database created by hud and available to the public since 1997 contains information on 48 672 projects and 3 23 million housing units placed in service between 1987 and 2018.

Lihtc section 42. Section 42 housing is subsidized housing and a part of a federal tax program that allows builders and developers to provide affordable housing. The tax credit reform act of 1986 created the low income housing tax credit program lihtc. 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.

Section 42 c 1 a provides that the qualified basis of any qualified low income building for any taxable year is an amount equal to i the applicable fraction determined as of the close of the taxable year of ii the eligible basis of the building determined under 42 d. Each qualified low income building as defined in 42 c 2. 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.

The credits are also commonly called section 42 credits in reference to the applicable section of the internal revenue code. The program regulations are under section 42 of the internal revenue code. In order to receive the credit the developers agree to maintain properties in a safe and decent condition plus maintain income and rent restrictions while they are receiving the credit.

It particularly benefits low income residents of high rent high income locales like the. Irc 42 low income housing credit part i introduction and pre contact analysis. Section 42 the low income housing tax credit is one of the federal government s low cost housing programs.

Developers then receive a federal tax credit from the government. The tax credits are more attractive than tax deductions as the credits provide a dollar for dollar reduction in a taxpayer s federal income tax whereas a tax deduction only provides a reduction in taxable income. Defined in section 42 of the internal revenue code and the extended use the tax credit compliance manual is available here.

For purposes of section 42 h of such code such building shall be treated as having allocated to it a housing credit dollar amount equal to the dollar amount appearing in the clause of subparagraph b in which such building is described. As a condition for receiving housing tax credits owners must keep the units affordable for a specified number of years. The tax credit encourages developers to build affordable housing to meet the needs of the community.