H.R. 10856: LIHTC Security Act

This bill would change rules for the Low-Income Housing Tax Credit (LIHTC), a federal tax incentive used to help finance affordable rental housing.

What the bill would do

• It would generally make a building ineligible for the LIHTC if, during the prior calendar year, any “relevant low-income unit” was occupied by someone who is an “alien individual” not covered by certain immigration-status categories listed in another housing law.
• In practical terms, this means tax credits would be denied to an affordable housing project unless the covered units meet this occupancy restriction.
• The bill also gives states a choice: a state can elect to reduce its LIHTC dollar amount by 5% instead of applying the new occupancy restriction.
• If a state does not make that election, the state’s annual LIHTC dollar amounts would be reduced by 5% for that year.

Transition period

• For certain existing or previously financed projects, a temporary transition rule would apply for taxable years beginning before January 1, 2031.
• During this transition period, the bill would apply the occupancy rule only if at least 75% of the relevant units meet the requirement, rather than requiring all of them to meet it.
• This transition rule would apply to projects that either received housing credit allocations before 2027 or were financed with certain bonds issued before January 1, 2027.

When it would take effect

• The occupancy rule would apply to taxable years beginning after December 31, 2027.
• The state election and related credit reduction would apply to calendar years beginning after December 31, 2027.

Relevant Companies

None found