Low-income Housing Tax Credits FRBSF Community Investments (pdf, 80 kb)
Catherine H. Such, Columbia Housing
The LIHTC is a credit against regular tax liability for investments in affordable housing projects acquired and rehabilitated after 1986. Generally speaking, the credit is available annually over a ten-year period beginning with the tax year in which the project is “placed in service” or, at the owner’s election, the next tax year. A tax credit project must meet “minimum set-aside” requirements. A qualified low-income housing project must comply continuously with these minimum set-aside requirements for a full 15-year compliance period. A failure to meet these requirements will result in a complete invalidation of a portion of the credit already taken. LIHTCs are carried as investments on the investing institution’s balance sheet in accordance with Generally Accepted Accounting Principles (GAAP).