The Low-Income Housing Tax Credit (LIHTC, sometimes pronounced “LIE-tech”) is a special tax credit offered by the federal government to investors as an incentive to create affordable rental housing for low-income families. For housing developments that meet certain established criteria, investors can claim a tax credit equal to a percentage of their costs in creating affordable housing.

Generally speaking, to qualify for LIHTC, a developer must designate a certain number of apartment units within the complex as low-income rentals, as well as maintain ongoing compliance. (In other words, low-income housing must remain available only to eligible low-income families.) Since it was established as a law in 1986, the LIHTC has been partly responsible for the creation of nearly 2.5 million low-income rental units nationwide, allowing many low-income families to find affordable housing in rental markets where they otherwise couldn’t afford to live.

How does LIHTC affect me as a low-income renter? Can I claim the LIHTC?

As a renter, you don’t benefit directly from the Low-Income Housing Tax Credit, nor can you claim the credit on your taxes. The tax credit is for the investor/developer who builds the apartment. Instead, you see indirect benefit in the form of a certain number of rent-restricted apartments in your area where rent is kept low for qualifying low-income families.

Lo Income Apartment RentalsIs my apartment a LIHTC apartment?

If you qualified for the apartment based on having a lower income, chances are your unit exists because of LIHTC. Nearly 90 percent of all affordable housing units in the U.S. were built using this tax credit.

Are rents all the same in LIHTC apartments?

No; the rent in a low-income apartment is based on a percentage of the Area Median Income (AMI) for the area in which the apartment is located. The maximum rent cannot exceed 30 percent of the recognized AMI in that area. However, median income can differ greatly in different parts of the country. For example, a low-rent apartment in New York City will cost much more, for example, than a low-rent apartment in Mobile, Alabama.

How do I qualify for a low-rent apartment?

Your eligibility for a low-rent apartment will be based on your income and measured against the median income of the area in which you live. Olympia Management can provide more information about available LIHTC apartments in your area and help you through the process of determining your eligibility. For more information, call us today at 256-894-2382.