The Low-Income Housing Tax Credit (Housing Credit) stimulates investment in affordable housing in underserved urban and rural communities and in higher cost suburban communities across the nation. It provides low-income families with a safe and decent place to live and, by lessening their rent burdens, frees up additional income that can be spent on other necessities or put into savings for education or homeownership. The Housing Credit is also a vital community and economic development tool, creating jobs and catalyzing redevelopment in struggling communities.
The Housing Credit is the single most important federal resource available to support the development and rehabilitation of affordable housing – currently financing about 90 percent of all new affordable housing development.
How the credit works:
Units funded by the Housing Credit must be affordable for people earning no more than 60 percent of the area median income (AMI), although most residents have far lower incomes.
Rent may not exceed 30 percent of the qualifying income.
Since its inception, the Housing Credit has spurred the development of approximately three million quality homes for working families, seniors, disabled veterans, and people at risk of homelessness.
Each year, the Housing Credit finances about 100,000 units of affordable housing and creates approximately 96,000 jobs in the construction and property management industries.
Housing Credit properties outperform market-rate housing properties, with occupancy rates topping 96 percent and a cumulative foreclosure rate of 0.66 percent over the program’s entire history.
The units tend to be occupied by very low-income families, with 48 percent of the units occupied by families making less than 30 percent of AMI; and 82 percent of the units occupied by families making less than 50 percent of AMI.
In 1987, LISC created National Equity Fund, Inc. (NEF) to attract investor capital to Housing Credit properties. NEF provides technical assistance, structures and closes these investments, and provides asset management services.
In 2018, LISC, through NEF, placed $1.2 billion in equity investments into tax credit properties. Since inception, it has invested more than $15.3 billion in 176,804 affordable rental residences.
NEF has established dedicated pools of funding to finance housing that is linked to healthcare services, housing for homeless veterans, and housing for victims of natural disasters.
Example of Housing Credit properties supported by NEF include:
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