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ABOUT LIHTC - (Low Income Housing Tax Credit)
Section 42 of the Internal Revenue Code provides federal tax credits as an incentive and financing tool to promote the development of multifamily housing units for low-income residents. The tax credits are available for new construction, as well as for the acquisition and rehabilitation of existing facilities.

Although the tax credits are a federal program, the administration and allocation of the credits are managed by the housing finance agency of each state. Each year the state is allocated a limited number of tax credits based upon population. On a competitive basis, interested developers apply to the state’s housing finance agency for approval of the tax credits. This application process is guided by the Qualified Allocation Plan (QAP) of each state.

The tax credits awarded to a project can be used by the developer or “sold” to an investor in exchange for equity capital. MPEG is just such an investor, interested in working with developers to purchase the tax credits of qualified projects.

CURRENT RATES:

 LIHTC RATES        2008 2009
30% 70% 30% 70%
 January 3.40% 7.93% 3.28% 7.65%
 February 3.40% 7.92% 3.23% 7.53%
 March 3.36% 7.84% 3.27% 7.63%
 April 3.36% 7.84% 3.29% 7.67%
 May 3.34% 7.80% 3.28% 7.65%
 June 3.38% 7.89% 3.30% 7.71%
 July 3.40% 7.93% 3.35% 7.82%
 August 3.40% 7.94% 3.35% 7.82%
 September 3.40% 7.93% 3.36% 7.84%
 October 3.37% 7.87% 3.33% 7.78%
 November 3.36% 7.83% 3.33% 7.76%
 December 3.36% 7.84% 3.34% 7.79%
 

The development of affordable housing is often made possible through a combination of funding sources such as loans, grants, and tax credits.  Through the use of tax credits, developers are able to rely heavily upon "equity capital" in the financing structure of the LIHTC properties.  The tax credit equity capital component can often account for as much as 75% of the total project financing.  This large percentage of equity (rather than debt) allows property owners to maintain lower rent levels, providing a more affordable option to low-income residents.

 

 

 

 

Mountain Plains Equity Group, Inc. • 490 North 31st Street, Suite 101 • Billings, Montana 59101
Phone: (406) 254-1677 • Fax: (406) 869-8693
info@mpequity.com
 
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Mountain Plains Equity Group