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Expirations and Early Exits of LIHTC Units: Implications for the Affordable Housing Stock

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Abstract

The Low-Income Housing Tax Credit (LIHTC) is the nation’s largest source of financing for the development and preservation of affordable rental housing. The program provides tax credits to developers that may cover a portion of their acquisition, construction, and rehabilitation costs. In exchange for these credits, developers must ensure affordability for tenants whose earnings are at or below specific percentages of the area median income (AMI) with rental rates that do not exceed 30% of their gross income. LIHTC affordability requirements last for 30 years at a minimum. The earliest LIHTC projects are reaching the end of their mandated affordability periods. In addition, many LIHTC property owners are pursuing early exits from LIHTC affordability requirements amid rising market rents. In this article, we examine these trends while evaluating their potential effects on the supply of LIHTC-supported housing.

Suggested Citation

  • Dustin Ingram & Maxwell Jaffe, 2025. "Expirations and Early Exits of LIHTC Units: Implications for the Affordable Housing Stock," Chicago Fed Letter, Federal Reserve Bank of Chicago, vol. 514, pages 1-10, October.
    • Handle: RePEc:fip:fedhle:102248
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    File URL: https://www.chicagofed.org/-/media/publications/chicago-fed-letter/2025/cfl514.pdf?sc_lang=en
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    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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