“Who does the low income tax credit affect?” FAQ 3

Why is this important? Some of these questions may seem aggressive, yet they are in the context of the community and how they were asked.

The Tax Break-Down: The Low-Income Housing Tax Credit

The LIHTC affects developers seeking to build low-income housing units by affecting their access to capital, the investors who ultimately receive the tax credits, and low-income households who may ultimately have greater access to affordable rental housing as a result of the tax credits.

• Who Benefits from the Low Income Tax Credit?
  • The final rental housing units are meant to serve households with incomes at or below 60 percent of median income in the local community.
  • According to some estimates, the LIHTC has helped produce 2.6 million housing units for lower-income households, creating over 3.6 million jobs and leveraging $100 billion in private capital. However, data suggests a muted impact overall on the net supply of affordable housing.
  • In terms of tenant data, in 2008 HUD made a statistical sample available to researchers. Some initial studies show that the tenants of LIHTC units tend to have slightly higher incomes than other federal rental assistance programs, but that more than 40 percent of LIHTC units had occupants who earned 30 percent or less of area median income (a threshold referred to as “extremely low-income” households).