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our research, analysis, and experts
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An Overview of the
Low-Income Housing Tax Credit
Key Findings
• The Low-Income Housing Tax Credit (LIHTC) offers developers
nonrefundable and transferable tax credits to subsidize the construction
and rehabilitation of housing developments that have strict income limits for
eligible tenants and their cost of housing.
• The LIHTC has subsidized over 3 million housing units since it was established
in 1986, the largest source of affordable housing financing.1 According to
the Department of Housing and Urban Development, the LIHTC costs the
government an average of $8 billion in forgone revenue each year.2
• Research indicates that LIHTC developers produce “housing units that are an
estimated 20 percent more expensive per square foot than average industry
estimates.”3
• The LIHTC suffers from fraud and is criticized as an ineffective method of
providing affordable housing. Congress should consider improvements to
oversight and administration of the credit, such as recommendations by the
Government Accountability Office for improved record keeping, data sharing,
and oversight, to strengthen cost assessment and fraud risk management.4
1 Will Fischer, “Low-Income Housing Tax Credit Could Do More to Expand Opportunity for Poor Families,” Center on Budget and
Policy Priorities, Aug. 28, 2018, 1, https://www.cbpp.org/sites/default/files/atoms/files/8-28-18hous.pdf.
2
Department of Housing and Urban Development, Office of Policy Development and Research, “Low-Income Housing Tax
Credits,” June 5, 2020, https://www.huduser.gov/portal/data