Change Coming to the Federal Low-Income Housing Tax Credit

The House is looking at possible changes to the Low-Income Housing Tax Credit (LIHTC). According to news services, the Chair of the Select Revenue Measures Subcommittee of the House Ways and Means Committee, Representative Richard Neal, said that support for the current LIHTC program continues, but a thorough review is needed. Additionally, he said that the House Committee on Financial Services will perform a review in parallel of non-tax housing programs in order to produce comprehensive affordable housing legislation.

Among the issues raised in recent testimony by Tax Legislative Counsel to the U.S. Treasury, Michael Desmond, were treatment of affordable housing projects in the extended use period, residents whose income increases above the specific limits during their tenancy, and eligibility of college students as LIHTC project residents.

Is this good news for LIHTC investors? Less complexity may lower transaction costs and make it more profitable to invest in LIHTC syndication funds, or perhaps even make it easier for large investors to invest directly in individual projects on their own rather than using syndicators to help them manage and diversify their investments. Legislative assistance is clearly needed during the extended use period when our clients are typically attempting to unload housing projects in which they have invested, and the process can be frustratingly slow and complex. If you need assistance with LIHTC investments (or divestments), please contact Peter Duffley.