How the Low-Income Housing Tax Credit program is a win-win for investors and the community
The Low-Income Housing Tax Credit (LIHTC) is a federal government program created by the Tax Reform Act of 1986 that offers a 10-year federal tax credit to investors of affordable housing. The LIHTC program provides an inventory of affordable housing and allows institutions like UMB to lend to developers who will help revitalize communities.
As part of UMB’s commitment to community and our efforts as part of the Community Reinvestment Act (CRA), we are dedicated to financing projects that help revitalize our communities and providing loans to companies that support the economic growth of our communities. We are always exploring new opportunities to ensure our support for all income classes through our lending and investment activity.
In recent years, affordable housing has presented itself as one of the country’s greatest needs. In fact, according to research from Freddie Mac‡, 51% of Americans have made spending or housing changes to afford their monthly housing payments, and 44% who had trouble affording their housing payment over the last two years reported having to move to afford housing costs.
Additionally, as part of the bank’s CRA commitment, we survey community partners across our footprint to understand the most pressing needs of low- and moderate-income individuals and families—our most recent survey confirmed that one of the most pressing needs across our communities is affordable housing. With the cost of housing becoming increasingly burdensome, the LIHTC program presents a viable solution. It also brings UMB one step closer to the community by helping finance businesses who are investing in projects that solve one of the greatest financial challenges of its residents.
As LIHTC programs vary state-by-state and involve complex regulatory requirements, it is crucial for lenders to become experts on the program in order to effectively partner with developers and revitalize the community. Developers need to partner with a lender who understands not just the myriad complexities that go into a successful LIHTC investment, but also the communities where these programs are being utilized. As an advocate for the LIHTC program, UMB brings together its knowledge of the community and the LIHTC program with an expanding network of LIHTC developers in order to expand affordable housing options within our communities.
The LIHTC program is a clear win-win for investors and residents in our communities, and we’re excited about the role we’re able to play in this important program across our eight-state footprint.
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