The LIHTC Program in Relation to Freddie Mac Small Balance Loans
The Low Income Housing Tax Credit (LIHTC) program is a federal income tax credit program that allows investors in qualified low-income properties to receive a 10-year, dollar-for-dollar deduction on their federal income taxes. Since 1986, the program has been credited with creating over 2.4 million low-income housing units, as well as supporting nearly 100,000 jobs each year. Each LIHTC transaction is governed by a Land Use Regulatory Agreement (LURA), which stipulates what a landlord can and cannot do with their property during the property’s compliance period (usually lasting 15 years), and the extended period (which varies, but may last an additional 5-10 years).
In regards to the Freddie Mac SBL program, properties that currently have a LURA and are still in their compliance period are not generally eligible. However, if the property has 75 units, get special approval from Freddie Mac, and is either in the last 2 years of its compliance period (or is already in its extended use period), the property may be eligible.