By Elizabeth Zach, RCAC staff writer

While federal lawmakers left Low-Income Housing Tax Credits in place during their tax overhaul earlier this year, affordable housing developers face another challenge: a lower corporate tax rate has investors less enthusiastic for the tax breaks that have traditionally helped them build affordable housing.

Such construction and preservation depends on Low-Income Housing Tax Credits (LIHTC, pronounced lie-tek). They are the cornerstone of the IRS-administered public-private partnerships that build and renovate affordable rental housing in the United States. Private companies that invest in affordable housing offset their taxes by buying tax credits from developers who in turn finance new housing or renovate older buildings.

The new tax legislation, however, now upends this process.

“Once President Trump signed the tax reform bill into law and reduced the top corporate tax rate, investors’ demand for the housing credit decreased even more because they suddenly faced a much lower federal tax liability,” writes Gabrielle Gurley, deputy editor of The American Prospect. “With reduced investor demand, the price investors were willing to pay for the credits also dropped.”

To read more, go here: http://prospect.org/article/closing-new-affordable-housing-gaps