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.