JOURNAL OF AFFORDABLE HOUSINGWritten by Glenn A. Graff, Published by the Journal of Affordable Housing, Volume 27, Number 2, 2018
As anyone who has worked on a transaction involving low-income housing tax credits (LIHTCs or Credits) knows, the financial structure of LIHTC transactions becomes very complicated due to the interaction of the LIHTC rules under Section 42 of the Internal Revenue Code of 1986, as amended, and the partnership taxation rules. This essay discusses the basic interaction of those rules using very simplified descriptions in an attempt to make the overall concepts accessible to a non-expert audience. It then addresses a key question that arises in LIHTC transactions: Why does permanent debt generally need to be nonrecourse in transactions involving LIHTC?
