Learn more about the unique financing structure that makes it possible to build and sustain affordable housing for low-income families and seniors.

The following resources provide a comprehensive overview of the Low-Income Housing Tax Credit (LIHTC) program, detailing how it works, its impact, and who benefits from it. These links offer a mix of quick explainers, in-depth articles, official reports, and data summaries to support learning and outreach.

The Low-Income Housing Tax Credit (LIHTC) subsidizes the acquisition, construction, and rehabilitation of affordable rental housing for low- and moderate-income tenants. The LIHTC was enacted as part of the 1986 Tax Reform Act and has been modified numerous times. Since the mid-1990s, the LIHTC program has supported the construction or rehabilitation of about 110,000 affordable rental units each year (though there was a steep drop-off after the Great Recession of 2008–09)—over 3.5 million units in all since its inception.

The federal government issues tax credits to state and territorial governments. State housing agencies then award the credits to private developers of affordable rental housing projects through a competitive process. Developers generally sell the credits to private investors to obtain funding. Once the housing project is placed in service (essentially, made available to tenants), investors can claim the LIHTC over a 10-year period. (see chart below)

LIHTC offers developers nonrefundable and transferable tax credits to subsidize the construction and rehabilitation of housing developments that have strict income limits for eligible tenants and their cost of housing.

Under the LIHTC program, state housing finance agencies allocate tax credits to developers of affordable rental housing projects. These tax credits are then sold to investors, such as banks and insurance companies, who use them to offset their federal tax liability. The funds raised from the sale of the tax credits are used to finance the development or preservation of affordable housing.

Many types of rental properties are LIHTC eligible, including apartment buildings, single-family dwellings, townhouses, and duplexes. Owners or developers of projects receiving the LIHTC agree to meet an income test for tenants and a gross rent test. There are three ways to meet the income test:

  • At least 20 percent of the project’s units are occupied by tenants with an income of 50 percent or less of area median income adjusted for family size (AMI).
  • At least 40 percent of the units are occupied by tenants with an income of 60 percent or less of AMI.
  • At least 40 percent of the units are occupied by tenants with income averaging no more than 60 percent of AMI, and no units are occupied by tenants with income greater than 80 percent of AMI.

The gross rent test requires that rents do not exceed 30 percent of either 50 or 60 percent of AMI, depending upon the share of tax credit rental units in the project. All LIHTC projects must comply with the income and rent tests for 15 years or credits are recaptured. In addition, an extended compliance period (30 years in total) is generally imposed.

  • Description: A quick and accessible 3-minute video explaining the basics of the LIHTC program, produced by Novogradac.
  • Watch here: Novogradac 3-Minute Explainer
  • Description: HUD’s official resource page offers comprehensive data, project placements, reports, and databases related to LIHTC.
  • Explore here: HUD User LIHTC Overview
  • Description: Provides an overview of the LIHTC program, specifically detailing its application in Nevada.
  • Learn more: Nevada Housing Division LIHTC Program (note this page is somewhat out of date, but gives a good overview of the program)
  • Description: This report provides essential context about the urgent need for affordable housing, offering a detailed analysis of the supply gap nationwide.
  • Access here: The Gap Report by the National Low Income Housing Coalition
  • Description: Offers a variety of resources, including articles, reports, and policy updates related to LIHTC, with a focus on detailed analyses.
  • Visit here: Novogradac LIHTC Resources
  • Description: This page provides a detailed overview of the LIHTC program, including policy insights and case studies focused on affordable housing.
  • Learn more: Enterprise LIHTC Overview
  • Description: Provides a simplified summary of LIHTC, its impact, and recommendations for improving its effectiveness.
  • Check it out: NLIHC Fact Sheet
  • Description: Offers a comprehensive guide to LIHTC, covering policies, administration best practices, and advocacy efforts.
  • Find more here: NCSHA LIHTC Resources

About Nevada HAND

Nevada HAND (Housing And Neighborhood Development) is the state’s largest developer, builder, and manager of affordable rental homes for low-income seniors and working families. We have been a 501(c)(3) non-profit partner in the Southern Nevada community since 1993, and today our portfolio includes 36 communities serving over 8,200 residents.

We recognize that affordable rent is just one aspect of what people need to thrive, and we are committed to creating “More Than a Home” for low-income individuals in Southern Nevada. Our high-quality, well-maintained apartment homes create a sense of neighborhood and belonging, and our supportive Resident Services program, with professional coordinators located on-site in each community, connects residents to critical resources that help them lead happier, healthier, more stable and successful lives.