Low-Income Housing Credit Program (LIHC)

Low-Income Housing Credit Program (LIHC)


The Low-Income Housing Credit Program (LIHC) was established under the Tax Reform Act of 1986 to promote private sector involvement in the retention and production of rental housing that is reserved for low-income households.

The LIHC program provides a dollar-for-dollar reduction in federal income tax liability for project owners who develop rental housing that serves low-income households with incomes up to 60% of area median income. The amount of LIHC available to project owners is directly related to the number of low-income housing units that they provide.

Most projects receiving an allocation of LIHC also utilize another governmental subsidy as part of their project financing. Federal subsidies such as the Community Development Block Grant (CDBG), HOME and USDA RHS 515 have been used in conjunction with the LIHC. On the State level, the LIHC has been allocated to projects employing Housing Trust Fund and New York State HOME Program subsidies. Local government capital subsidies have been employed extensively in projects located in New York City.

Project owners use the LIHC allocation as a gap filler in their development budgets. The LIHC is turned into equity to fill the project gaps through the sale of the project and the credit to investors.

DHCR is the lead Housing Credit Agency for New York State. Other Housing Credit Agencies are the New York State Housing Finance Agency, the New York City Department of Housing Preservation and Development and the Development Authority of the North Country.


Eligible Applicants

Applicants eligible to receive allocations of LIHC include individuals, corporations, limited liability corporations and limited partnerships, with the latter two being the most widely used ownership entities. Economic and scoring incentives are provided to encourage the participation of not-for-profit corporations in LIHC projects.

Eligible Areas

All areas within a Housing Credit Agency's jurisdiction are eligible to receive an allocation from that Housing Credit Agency.

Income Population Served

The LIHC is available to the project owners only for units that are occupied by low-income households. A low-income household is defined as one having an income of 60 percent or less of the area median adjusted for household size.

Funding Limitations

The LIHC dollar amount allocated to a project is based upon the capital costs -exclusive of land costs-of acquiring, developing or rehabilitating rental units occupied by low-income households and is limited to meeting the project economic gap.

Program Information