The Housing Credit is a federal tax credit created by President Reagan and Congress in the Tax Reform Act of 1986.  The legislative history for the Housing Credit states Congress created the Housing Credit because, “it was concerned that the tax preferences for low‐income rental housing available under prior law were not effective in providing affordable housing for low‐income individuals.  Congress believed a more efficient mechanism for encouraging the production of low‐income rental housing could be provided through the low‐income rental housing tax credit.”  Over its 29‐year life, the Housing Credit has become the most successful affordable rental housing production program in history.

The Housing Credit offers a dollar-for-dollar reduction in a taxpayer’s income tax liability in return for making a long-term investment in affordable rental housing.  State agencies award Housing Credits to developers, who then sell the Credits to private investors in exchange for funding for the construction and rehabilitation of affordable housing.  These funds allow developers to borrow less money and pass through the savings in lower rents for low‐income tenants.  Investors, in turn, receive a 10‐year tax credit based on the cost of constructing or rehabilitating apartments that cannot be rented to anyone whose income exceeds 60 percent of area median income (AMI).

The program allows states to allocate Housing Credits to developments they select pursuant to qualified allocation plans (QAPs) they develop that identify the type, location, and other characteristics of affordable housing needed throughout the state.  The plans must describe the criteria agencies will apply in allocating the Credit and are subject to review on an annual basis after a public hearing and comment process.  In this way, the Housing Credit empowers states to respond to the housing needs, priorities, and challenges that states consider most important.


Housing Credit Allocating Agencies

Housing Credit Legislative and Advocacy Information


2016 NCSHA Housing Credit Q&A

Housing Credit Allocating Agencies -
Program Information

Housing Credit Reccomended Practices in Compliance Monitoring
Housing Credit Reference Guide
 Key Congressional Commitees

Housing Credit Reccomended Practices in
Allocation and Underwriting

Housing Credit Correspondence



NCSHA Blog Posts

  • May 8, 2017

    The Federal Housing Finance Agency (FHFA) earlier today released Fannie Mae and Freddie Mac’s proposed Underserved Market Plans (the Plans). The purpose of these plans is for each firm to explain how it intends to carry out its duties as outlined by FHFA’s Enterprise Duty to Serve rule.

  • April 13, 2017

    On April 12, HUD published Understanding Whom the LIHTC Program Serves: Data on Tenants in LIHTC Units as of December 31, 2014, providing demographic and economic data about Housing Credit tenants, including race, ethnicity, family composition, age, income, use of rental assistance, disability status, and monthly rent burden of tenants.


    Housing Credits - Resources