Low-income Housing Credit

Low-income Housing Credit

Low-income Housing Credit means:
credit available to encourage business owners to provide affordable housing for low-income individuals. The credit rate is set monthly by the U.S. Internal Revenue Service and is available over a 10-year period.

For most newly constructed and substantially rehabilitated housing, the credit percentages provide a credit stream with a present value equal to 70% of the total qualified expenditures. For housing receiving other federal subsidies, and for an existing building that is substantially rehabilitated, the credit stream has a present value equal to 30% of the total qualified expenditures. Generally, the part of the building for which the credit is claimed must be rented to qualified low-income tenants at restricted rents for 15 years after the building is placed in service.

Generally, in order for a credit to be claimed with respect to a building, the building owner must receive a credit allocation from the appropriate credit authority. The low- income housing credit is allocated by state or local government authorities subject to an annual limitation for each state. IRC (check if this IRC provision is current here) §42.


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