What Is Section 42

The tax credit encourages developers to build affordable housing to meet the needs of the community.

What is section 42. Investors receive a reduction in their tax liability in return for providing affordable housing to people with fixed or lower income. 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. What is section 42.

It ll take research and time to find a place. In rental assistance programs like section 8 the residents rents are based on 30 percent of household income with the remaining adjusted portion subsidized by the government. How do i determine if i am eligible for a section 42 tax credit.

Section 42 resident pays is capped at a fixed amount. Unlike section 8 rentals section 42 doesn t provide tenants with government assistance. What is section 42 housing.

The tax code also establishes an affordable housing program for renters. The tax credit reform act of 1986 created the low income housing tax credit program lihtc. Section 42 is an affordable rental housing program.

Visit huduser gov to see the latest income limits in your area. Section 42 the low income housing tax credit is one of the federal government s low cost housing programs. Basically section 42 means developers can t charge rent that s higher than 30 percent of a tenant s income.

Section 42 isn t just beneficial for builders however. Section 42 is not a subsidized rent program. 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.