Low Income Housing Tax Credit Program

​The Federal Low-Income Housing 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 and is administered by the Federal Internal Service (IRS) in accordance with Section 42 of the Internal Revenue Code.​​

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 Qualified Allocation Plan (QAP). Projects financed with tax-exempt bonds may be eligible for Tax Credits outside of the competitive process. Project sponsors, or their investor partners 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 rental housing building. The applicable percentage is determined by the IRS.

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 may be 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 and is subject to a covenant to enforce compliance for a minimum of 40 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.

Qualified Allocation Plan and Multifamily Rental Financial Program Guide

For more information about the LIHTC Program and the current Qualified Allocation Plan and Multifamily Rental Financing Program Guide, please visit the Multifamily Housing Development Document Library​.

More Information

CONTACT: Housing Development Programs
Maryland Department of Housing and Community Development
7800 Harkins Rd
Lanham, MD 20706
E: ​taxcredits.dhcd@maryland.gov
P: 301-429-7854​​​​