[Infographic] The Low Income Housing Tax Credit Program: How does it work?

The Low Income Housing Tax Credit Program (LIHTC) is an indirect subsidy mechanism created in 1986 to promote affordable housing construction. The Internal Revenue Service and state housing finance agencies work together to create incentives for nonprofits and for-profit developers to build affordable housing by attracting investors for tax credit benefits. With equity from sale of the tax credits, developers are able to build affordable housing. LIHTC properties provide units for low-income renters at affordable rents.

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