Affordable Housing Finance

The Low-Income Housing Tax Credit: How It Works and Who It Serves

Published: 2018 | Corianne Payton Scally, Amanda Gold, Nicole DuBois | Urban League


The Low-Income Housing Tax Credit (LIHTC) is a complex but crucial tool for the production and preservation of affordable rental housing. Through this program, private investors receive a federal income tax credit as an incentive to make equity investments in affordable rental housing. Since 1986, nearly 3 million affordable housing units have been placed in service. In this report, we outline the basics of the LIHTC program, including how it works, the various partners involved, how financing is structured, how investors benefit from the program, and who lives in the LIHTC properties. We also highlight successes of the program and examines the challenges it faces.