Function

The purpose of the low income housing tax credit is to provide affordable housing for people who cannot afford typical rental or mortgage payments. The credit is meant to entice companies to develop projects that create this housing.

Types of Projects

Projects that qualify for the low income housing tax credit include new construction, or remodeling and refurbishing existing properties.

Requirements

To qualify for the low income housing tax credit, 20 percent of the residents of a building or complex must make less than 50 percent of the median income for that area; alternatively, 40 percent of the residents must make less than 60 percent of the area's median income, explains the U.S. Department of Housing and Urban Development.

Time Frame

To continue to obtain the low income housing tax credit, the building or complex must commit to continuing to meet the requirements for the percentages of low income families for 30 years.

Benefits

Companies that are involved in eligible low income housing tax credit projects can subtract a specific amount from the amount of federal taxes they owe. This amount varies from project to project.

Considerations

Low income housing tax credits are allocated by the states. To determine whether a project completed by your business qualifies for the credit and for more information about the amount of the credit, contact your state's Finance Authority or Department of Housing.

Source:

U.S. Department of Housing and Urban Development: Low Income Housing Tax Credit