Low-Income Housing Tax Credit (LIHTC)

How does the low-income housing tax credit affect Florida businesses?

The Low-Income Housing Tax Credit (LIHTC) is a federal tax incentive to encourage private investment in affordable housing developments. In Florida, this program is administered by the Florida Housing Finance Corporation (FHFC). It is instrumental in promoting economic growth by supporting the construction and rehabilitation of low-income housing units. Florida-based businesses can benefit from the LIHTC in several ways.

Developers and investors can earn tax credits for constructing or rehabilitating eligible affordable housing projects, offsetting their federal tax liability. Additionally, the increased availability of affordable housing can attract a stable workforce to the region, contributing to economic growth and providing businesses with a larger pool of potential employees.

Need help regarding economic development incentives? Schedule your consultation today with a top economic development attorney.

Which Florida and federal laws and regulations apply to the LIHTC?

The LIHTC, a federal program, is under Section 42 of the Internal Revenue Code (26 USC § 42). At the state level, the FHFC is responsible for administering the program under the Florida Statutes (Fla. Stat. § 420.5099). The FHFC allocates the tax credits through a competitive application process, following the annual Qualified Allocation Plan (QAP) guidelines. The QAP sets forth the criteria for eligible projects, the scoring system used to evaluate applications and other relevant information about the LIHTC program in Florida.

Which Florida businesses qualify?

The following are critical eligibility criteria for Florida businesses:

• For-profit or Non-Profit Developers: The LIHTC program is open to for-profit and non-profit entities developing affordable housing projects.
• Affordable Housing Focus: Businesses must be involved in constructing or rehabilitating residential rental properties for low-income households.
• Rent and Income Restrictions: LIHTC properties must adhere to strict rent and income limits based on the local area’s median income.
• Compliance Period: Developers must commit to maintaining the affordability of the housing units for at least 15 years, with an additional 15-year extended-use period.

When a set of facts is appropriate to meet the Low-Income Housing Tax Credit requirements, there are many paths a claimant may take. We are value-based attorneys at Jimerson Birr, which means we look at each action with our clients from the point of view of costs and benefits while reducing liability. Then, based on our client’s objectives, we chart a path to seek appropriate remedies.

To determine whether your unique situation may necessitate litigation, please contact our office to set up your initial consultation.

What are the strategic benefits for qualifying Florida businesses?

• Tax Savings: By participating in the LIHTC program, businesses can reduce their federal tax liability, making it a financially attractive investment.
• Stable Cash Flow: Affordable housing projects tend to have low vacancy rates and consistent rental income, resulting in a steady cash flow for developers and investors.
• Community Revitalization: LIHTC projects often contribute to the revitalization of neighborhoods, increasing the overall attractiveness of the area for businesses and residents alike.
• Positive Public Relations: Involvement in LIHTC projects can boost a company’s public image by demonstrating a commitment to social responsibility and community development.
• Economic Growth: By contributing to the creation of affordable housing, businesses indirectly support local economic growth through job creation and the attraction of a stable workforce

Please contact our office to set up your initial consultation to see what actions or defenses may be available for your unique situation.

Frequently Asked Questions

1. How does the Low-Income Housing Tax Credit (LIHTC) program work in Florida?

The LIHTC program in Florida is a federal tax incentive that encourages private investment in affordable housing developments. Developers apply for tax credits through the Florida Housing Finance Corporation (FHFC). Once approved, developers can utilize the tax credits or sell them to investors to generate project equity. This equity helps reduce the developers’ need for debt financing, enabling them to offer lower rents to eligible low-income tenants.

2. Can the LIHTC program be combined with other funding sources in Florida?

Yes, the LIHTC program can be combined with other funding sources such as state and local housing grants, tax-exempt bonds, and federal programs like the HOME Investment Partnerships Program and the Community Development Block Grant (CDBG) program. Combining multiple funding sources can enhance the financial feasibility of affordable housing projects and expand the impact of the LIHTC program in Florida.

3. How can Florida businesses get involved in the LIHTC program?

Florida businesses can participate in the LIHTC program in various ways, such as becoming a developer or co-developer, investing in tax credit projects, or offering financing or support services for LIHTC developments. Additionally, businesses can partner with non-profit organizations or other developers to create joint ventures focusing on affordable housing projects utilizing the LIHTC program.

Have more questions about an economic development-related situation?

Crucially, this overview of the Low-Income Housing Tax Credit does not begin to cover all the laws implicated by this issue or the factors that may compel the application of such laws. Every case is unique, and the laws can produce different outcomes depending on the individual circumstances.

Jimerson Birr attorneys guide our clients to help make informed decisions while ensuring their rights are respected and protected. Our lawyers are highly trained and experienced in the nuances of the law, so they can accurately interpret statutes and case law and holistically prepare individuals or companies for their legal endeavors. Through this intense personal investment and advocacy, our lawyers will help resolve the issue’s complicated legal problems efficiently and effectively.

Having a Jimerson Birr attorney on your side means securing a team of seasoned, multi-dimensional, cross-functional legal professionals. Whether it is a transaction, an operational issue, a regulatory challenge, or a contested legal predicament that may require court intervention, we remain tireless advocates at every step. Being a value-added law firm means putting the client at the forefront of everything we do. We use our experience to help our clients navigate even the most complex problems and come out the other side triumphant.

If you want to understand your case, the merits of your claim or defense, potential monetary awards, or the amount of exposure you face, you should speak with a qualified Jimerson Birr lawyer. Our experienced team of attorneys is here to help. Call Jimerson Birr at (904) 389-0050 or use the contact form to schedule a consultation.