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Real Estate

Low-Income Housing Tax Credits (§42 LIHTC)

9% or 4% credit per year for 10 years on affordable housing.

Overview

LIHTC provides a dollar-for-dollar federal credit for 10 years on qualifying affordable housing. 9% competitive credits cover ~70% of construction cost; 4% non-competitive credits pair with tax-exempt bonds. Investors (banks under CRA) pay $0.85–$0.95 per credit dollar. Complex compliance for 15 years.

Best fit
Affordable housing developersCRA-motivated banksMission-aligned investors
Estimated impact
Equity at ~$0.90/credit dollar vs 100% cash

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