What Is Section 42 Housing

The tax credit reform act of 1986 created the low income housing tax credit program lihtc.

What is section 42 housing. Developers then receive a federal tax credit from the government. You may also hear the program referred to as either the low income housing tax credit program or the rental housing tax credit program this is because section 42 is an affordable housing program established by the federal tax code that allows developers of affordable housing to receive a federal tax credit. Unlike section 8 rentals section 42 doesn t provide tenants with government assistance.

It particularly benefits low income residents of high rent high income locales like the. The section 42 housing program refers to that section of the internal revenue tax code which provides tax credits to investors who build affordable housing. What is section 42.

In order to receive the credit the developers agree to maintain properties in a safe and decent condition plus maintain income and rent restrictions while they are receiving the credit. Unlike section 8 section 42 is not a government subsidized program but instead is known as a housing tax credit program that benefits builders and real estate developers who agree to devote space in their communities to affordable housing. The irc 42 low income housing credit program was enacted by congress as part of the tax reform act of 1986 to encourage new construction and rehabilitation of existing buildings as low income rental housing for households with income at or below specified income levels.

Section 42 is also known as the low income housing tax credit and is also an income based housing program but it works differently than section 8. Section 42 refers to that section of the tax code that provides tax credits to investors who build affordable housing. Section 42 the low income housing tax credit is one of the federal government s low cost housing programs.

Here s what else you need to know about the program. Investors receive a reduction in their tax liability in return for providing affordable housing to people with fixed or lower income. The program regulations are under section 42 of the internal revenue code.

Investors receive a reduction in their tax liability in return for providing affordable housing to people with fixed or lower incomes. Section 42 housing is subsidized housing and a part of a federal tax program that allows builders and developers to provide affordable housing. The section 42 housing program makes rental units more affordable.