WASHINGTON — Congress approved a significant increase in the Low Income Housing Tax Credit program in passing a trillion-dollar budget bill last week.
This is the first increase in the tax credit in “over a decade,” Sen. Maria Cantwell, DWash., a longtime champion of the program, said in a press release.
The program currently provides states and local LIHTC-allocating agencies with nearly $8 billion in annual budget authority to issue tax credits for the acquisition, rehabilitation or new construction of rental housing targeted to lower-income households.
The Cantwell provision will increase the allocation of LIHTCs by 12.5% over the next four years, at a cost of nearly $3 billion.
And it will help mitigate the hit the tax credit program took as part of the tax deal that President Trump signed Dec. 22. Pricing for the credits dipped after the tax cut due to the reduction in the corporate rate from 35% to 21%.
For a corporate investor, that represents a 15% cut in the tax savings they receive from investing in low-income housing tax credits, according to Benson Roberts, president and chief executive of the National Association of Affordable Housing Lenders.
“This is a significant win for affordable housing production and preservation,” especially in combination with increased funding for several HUD programs such as community development block grants, Roberts said.