H.R. 3540: Low-Income Housing Tax Credit Elimination Act

This bill, known as the Low-Income Housing Tax Credit Elimination Act, proposes the elimination of the Low-Income Housing Tax Credit (LIHTC) program. The LIHTC is a federal tax incentive intended to encourage the development and rehabilitation of affordable rental housing for low-income households.

Key Provisions of the Bill

• The bill amends the Internal Revenue Code of 1986, specifically section 42, regarding low-income housing credits.
• It includes a new provision that states that no tax credits will be issued for buildings that begin operating after the enactment of this subsection.
• This effectively means that any new developments or improvements made with the expectation of receiving these tax credits after the bill is enacted would no longer be eligible.

Implications

• The elimination of the LIHTC could have significant consequences for the availability of affordable housing, as developers may lose a critical source of financing for new projects.
• Existing projects that have received credits will not be affected, but future projects relying on the LIHTC for funding would no longer have access to this incentive.
• This may lead to a decrease in the construction of new low-income housing units over time, potentially worsening the affordable housing crisis in various regions.

Context of the Bill

The LIHTC has been a key tool for fostering investment in affordable housing since its inception, providing significant tax benefits to developers who comply with certain income and rent restrictions. The proposed sunset of this tax credit reflects a shift in policy direction where such incentives might no longer be deemed necessary or effective.

Considerations

Those involved in the housing market, including developers, investors, local governments, and potential tenants may need to consider the impact of this legislation if it were to pass. The act essentially aims to end a long-standing federal program designed to aid low-income housing development.

Relevant Companies

None found.