The Low-Income Housing Tax Credit : HERA, ARRA and beyond

The Low-Income Housing Tax Credit (LIHTC) has arguably been the most successful government subsidy to finance affordable housing. Since its creation in the Tax Reform Act of 1986 as Internal Revenue Code (IRC) Section 42, the LIHTC program has helped finance over 1,670,000 housing units. LIHTC has endured the test of time due to its strength both in the public policy and political spheres as well as its effectiveness in attracting significant private capital and in encouraging private oversight. The collapse of corporate earnings in late 2008 led to the subsequent collapse of the LIHTC syndication markets as demand for LIHTCs practically evaporated. Proposed affordable housing developments that anticipated receiving private investment through the sale of LIHTCs stalled. In response to the overall national housing crises, Congress enacted the Housing and Economic Recovery Act of 2008 (HERA 2008), which contained numerous LIHTC amendments. In early 2009, Congress passed the American Recovery and Reinvestment Act of 2009 (ARRA), which temporarily converted the LIHTC program into a grant program. While HERA 2008 and ARRA were well intentioned, ARRA is a stopgap measure that could become costly to the US budget. This thesis argues that additional changes to IRC Section 42 should be implemented by Congress in order to reinvigorate the LIHTC syndication markets and improve LIHTC efficiency. This thesis will first provide a detailed, yet comprehensible, background on how the LIHTC functions.

Department dc:contributor.department

Massachusetts Institute of Technology. Center for Real Estate. Program in Real Estate Development.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2009

Author dc:creator

• Korb, Jason (Jason Bryan Patricof)

Advisor dc:contributor.advisor

• Lynn Fisher.

• Center for Real Estate. Program in Real Estate Development.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/54857

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/54857