The Low-Income Housing Tax credit program is a federal tax credit program that was created by the Tax Reform Act of 1986. Details about the Low-Income Housing Tax Credit Program (LIHTC) can be found in the Internal Revenue Code (IRC), Section 42.
Although the program exists on the federal level, the individual states have authority to make determinations about which developers will become eligible to receive these important tax incentives. Pursuant to the IRC, a qualified allocation plan is prepared annually. In the state of Arizona, the Arizona Department of Housing prepares this plan, which is approved by the governor.
Developers who qualify for the LIHTC can receive significant tax benefits when developing qualified housing projects. Developers need to understand the requirements and complete a comprehensive application demonstrating that they should qualify for the federal tax incentives.
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