Federal Low Income Housing Tax Credit Program Fact Sheet (LIHTC)
Purpose
The Federal Low-Income Housing Tax Credit (Tax Credit) was created by the Tax-Reform
Act of 1986 and extended by the revenue Reconciliation Acts of 1989 and 1992 in
order to encourage the private sector to invest in the construction and rehabilitation
of housing for low- and moderate-income families. The law gives states an annual
tax credit allocation based on population.
Tax Credits are awarded on a competitive basis to nonprofit and for-profit sponsors
of eligible housing projects. Awards are based on the criteria outlined in the State's
Allocation Plan. Projects financed with tax-exempt bonds may be eligible for Tax
Credits outside of the competitive process. Project sponsors, or in the case of
syndication, investors claim the Tax Credit on their federal income tax return.
The Tax Credit equals the applicable percentage of the qualified basis of each qualified
low-income building. The applicable percentage is determined by the IRS monthly.
Eligible Types of Housing
A residential rental building that is to be placed in service in or within two years
after the year in which the allocation is made and provides at least, in part for
low-income occupancy is eligible to receive a Tax Credit allocation. The low-income
project must comply with a number of requirements regarding tenant income, maximum
rent levels, and the percentage of low-income occupancy. The building must remain
in compliance for a minimum of 15 years.
Eligible Applicants
For-profit and nonprofit sponsors are eligible to apply for Tax Credits. Ten percent
of the State's annual allocation is set aside solely for nonprofit sponsors.
Eligible Residents
The owner of a qualified low-income building must rent either 20 percent of the
units to households with incomes of 50 percent or less of the area median income
or 40 percent of the units to households with incomes of 60 percent or less of the
area median income.
Local Government Involvement
The local government in which a housing development financed through the program
is located must generally approve the development formally and make a contribution
which materially reduces the project's development or operating costs, or otherwise
significantly supports the development.
For More Information pertaining to the Federal Low Income Housing Tax Credit Program
(LIHTC)
http://www.mdhousing/Website/Programs/LIHTC/Default.aspx
Contact:
Housing Development Programs
Community Development Administration
Maryland Department of Housing and Community Development
100 Community Place
Crownsville, MD 21032-2023
taxcredits@dhcd.state.md.us
410-514-7446
Toll Free (Maryland Only): 800-543-4505