Low-Income Housing Tax Credit

Glossary

Low-Income Housing Tax Credit

LIHTC is a federal tax credit program that finances affordable rental housing and creates income, rent, reporting, and compliance requirements.

Definition

The Low-Income Housing Tax Credit (LIHTC) is a federal tax incentive program used to finance affordable rental housing. It supports acquisition, new construction, rehabilitation, or preservation by awarding tax credits that can be sold to investors for project equity. LIHTC communities typically include income-restricted units and rent caps, so operations teams must manage compliance and reporting along with normal property operations.

Example

A community manager at a mixed-income community verifies an applicant’s household income before approving a LIHTC unit, sets rent within the allowed cap, and keeps the resident file ready for a compliance audit.

Why It Matters?

LIHTC affects leasing, rent setting, occupancy planning, resident documentation, and audit readiness. For operations leaders, clear workflows for eligibility checks, recertifications, reporting, and file audits help reduce compliance risk and keep affordable units operating as intended.

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