Newsletter

Expirations and Early Exits of LIHTC Units: Implications for the Affordable Housing Stock

Abstract: The Low-Income Housing Tax Credit (LIHTC) is the nation’s largest source of financing for the development and preservation of affordable rental housing. The program provides tax credits to developers that may cover a portion of their acquisition, construction, and rehabilitation costs. In exchange for these credits, developers must ensure affordability for tenants whose earnings are at or below specific percentages of the area median income (AMI) with rental rates that do not exceed 30% of their gross income. LIHTC affordability requirements last for 30 years at a minimum. The earliest LIHTC projects are reaching the end of their mandated affordability periods. In addition, many LIHTC property owners are pursuing early exits from LIHTC affordability requirements amid rising market rents. In this article, we examine these trends while evaluating their potential effects on the supply of LIHTC-supported housing.

JEL Classification: H53; R31; R38; R58; O18;

Bibliographic Information

Provider: Federal Reserve Bank of Chicago

Part of Series: Chicago Fed Letter

Publication Date: 2025-10

Volume: 514

Pages: 10