Tax credits are incentives that allow taxpayers to deduct certain amounts from the taxes they owe the government. When it comes to the HUD 223(f) loan program, the most common tax incentive program is the Low-Income Housing Tax Credit, or LIHTC. The LIHTC allows property owners to take a 10-year tax credit on their federal income taxes, as long as they keep their property’s rents under a certain limit.
Low-to-moderate income housing is subsidized housing intended for people whose incomes are low to moderate when compared to prevailing incomes. In general, all Section 8 housing must be intended for people with this income level. To determine what the rent limits are based on the low-to-moderate income level in your area, visit the HUD User Portal’s Income Limits Dataset and look up the county in which your property is located.
Low-Income Housing Tax Credits, or LIHTCs are federal tax incentive intended to increase the availability of low-income housing. LIHTC credits can be claimed for up to ten years after the construction is completed and the property is leased up. LIHTCs are available as long as the property follows LIHTC requirements, and can be used with HUD multifamily loans including 223(f) loans and HUD 221(d)(4) loans.
Low-Income Housing Tax Credits, or LIHTCs, are used to either construct new rental buildings or renovate existing buildings. Two annual tax credits are available for HUD multifamily financing. The nature of the project dictates the credit received. The 4% tax credit (30% subsidy) is for the acquisition of existing buildings for rehabilitation and new construction financed by tax-exempt bonds. The 9% tax credit (70% subsidy) is usually for new construction and substantial rehabilitation without federal subsidies.