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Showing posts from May, 2024

Low-Income Housing Tax Credit

The Low-Income Housing Tax Credit (LIHTC) is a terrible program. What is it? It is the principal path the federal government adopted to provide low-income housing except it doesn't. LIHTC birthed in Reagan's infamous tax bill of 1986, gave  private investors  "a federal income tax credit as an incentive to make equity investments in affordable rental housing." If a developer agrees to 20 percent of the units being so called low-income, then the developer is eligible for the tax credit for those units. However, there are two major flaws: the units are not really low-income and the entire program disappears after 30 years when the developer can charge market rates.  LIHTC became the brainchild of the real estate industry that was desperate to stop the construction of public housing in which the real estate sages could not profit. And stop it they did. Now, almost 40 years later, even liberal think tanks, like the Urban Institute, will laud the successes of LIHTC. After