Investable Tax Credits: The Case of the Low Income Housing Tax Credit

Year 15 and the Preservation of Low-Income Housing Tax Credit Projects: Lessons from Detroit, Michigan

Journal of Planning Education and Research ◽

10.1177/0739456x20962212 ◽

2020 ◽

pp. 0739456X2096221

Author(s):

Lan Deng

Keyword(s):

At Risk ◽

Low Income ◽

Tax Credits ◽

Tax Credit ◽

Institutional Actors ◽

National Housing ◽

Low Income Housing

This study examines the efforts to preserve the Low-Income Housing Tax Credits (LIHTC) projects that are at risk from their year-15 transition in Detroit, Michigan. Using the preservation framework recommended by the National Housing Trust, the paper first identifies the risks LIHTC projects in Detroit face. It then reports what major institutional actors in LIHTC developments have done in addressing those risks, with particular attention to the roles these actors have played in shaping preservation needs and actions. The study concludes by discussing what broader lessons can be learned from Detroit with regard to the preservation of LIHTC projects nationwide.

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Comparing Opportunity Metrics and Locational Outcomes in the Low-Income Housing Tax Credit Program

Journal of Planning Education and Research ◽

10.1177/0739456x17711224 ◽

2017 ◽

Vol 38 (4) ◽

pp. 449-462 ◽

Cited By ~ 4

Author(s):

Rebecca J. Walter ◽

Ruoniu Wang ◽

Sarah Jones

Keyword(s):

Low Income ◽

San Antonio ◽

Racial Diversity ◽

Tax Credits ◽

Tax Credit ◽

Socioeconomic Conditions ◽

Credit Program ◽

Low Income Housing

The Low-Income Housing Tax Credit (LIHTC) has been criticized for concentrating units in poor minority neighborhoods. This study analyzes the distribution of LIHTC units in San Antonio and assesses the opportunity provision in Texas’s 2016 Qualified Allocation Plan (QAP). Results indicate that since the incorporation of the opportunity provision in 2009, more tax credits have been allocated to neighborhoods with lower poverty and higher racial diversity. Maximum scoring neighborhoods in the current QAP are located in low-poverty communities that perform above average in socioeconomic conditions, but below average in accessibility and sustainable healthy environments.

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Do Firms Incur Costs to Avoid Reducing Pre-Tax Earnings? Evidence from the Accounting for Low-Income Housing Tax Credits

The Accounting Review ◽

10.2308/accr.2010.85.2.637 ◽

2010 ◽

Vol 85 (2) ◽

pp. 637-669 ◽

Cited By ~ 14

Author(s):

Leslie A. Robinson

Keyword(s):

Real Estate ◽

Low Income ◽

Market Price ◽

Tax Credits ◽

Tax Credit ◽

Income Statement ◽

Confidential Data ◽

Corporate Investors ◽

The Right ◽

Low Income Housing

ABSTRACT: Examining corporate investment in low-income housing tax credits reveals that firms are willing to incur costs in order to manage the income statement classification of an expense. Accounting rules allow investors who purchase a tax benefit guarantee to amortize their equity in a real estate partnership as a tax expense, rather than as an operating expense, thus avoiding a reduction in pre-tax earnings. Using confidential data from tax credit syndicators, I model the market price of a tax credit as a function of the existence of the guarantee, controlling for foreclosure risk on the underlying real estate. The results are consistent with the hypothesis that an economically significant amount of the guarantee fee is paid by corporate investors for the right to use an accounting method that avoids reductions in pre-tax earnings.

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